GeoPark Limited (NYSE:GPRK) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that GeoPark will make substantially more sales than they'd previously expected. GeoPark has also found favour with investors, with the stock up a worthy 14% to US$13.47 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the most recent consensus for GeoPark from its five analysts is for revenues of US$1.1b in 2022 which, if met, would be a solid 20% increase on its sales over the past 12 months. Per-share earnings are expected to leap 49% to US$4.31. Before this latest update, the analysts had been forecasting revenues of US$1.0b and earnings per share (EPS) of US$4.29 in 2022. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of US$25.00, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic GeoPark analyst has a price target of US$39.00 per share, while the most pessimistic values it at US$18.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that GeoPark's rate of growth is expected to accelerate meaningfully, with the forecast 44% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 13% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 6.0% per year. So it's clear with the acceleration in growth, GeoPark is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better 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 GeoPark.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential warning signs with GeoPark, including a weak balance sheet. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we've identified .
We also provide an overview of the GeoPark Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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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