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Analysts Are Betting On Headwater Exploration Inc. (TSE:HWX) With A Big Upgrade This Week

Shareholders in Headwater Exploration Inc. (TSE:HWX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

Following the upgrade, the latest consensus from Headwater Exploration's dual analysts is for revenues of CA$475m in 2022, which would reflect a sizeable 97% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$386m of revenue in 2022. The consensus has definitely become more optimistic, showing a sizeable gain to revenue forecasts.

View our latest analysis for Headwater Exploration

earnings-and-revenue-growth
earnings-and-revenue-growth

There was no particular change to the consensus price target of CA$10.31, with Headwater Exploration's latest outlook seemingly not enough to result in a change of valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Headwater Exploration, with the most bullish analyst valuing it at CA$12.00 and the most bearish at CA$9.50 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Headwater Exploration's past performance and to peers in the same industry. It's clear from the latest estimates that Headwater Exploration's rate of growth is expected to accelerate meaningfully, with the forecast 147% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 69% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 0.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Headwater Exploration is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Headwater Exploration.

Analysts are clearly in love with Headwater Exploration at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 1 other flag we've identified .

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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