Beach Energy Limited (ASX:BPT) Analysts Just Cut Their EPS Forecasts Substantially
The analysts covering Beach Energy Limited (ASX:BPT) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the consensus from 13 analysts covering Beach Energy is for revenues of AU$1.5b in 2022, implying a noticeable 2.1% decline in sales compared to the last 12 months. Per-share earnings are expected to rise 5.5% to AU$0.16. Previously, the analysts had been modelling revenues of AU$1.6b and earnings per share (EPS) of AU$0.19 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.
View our latest analysis for Beach Energy
The consensus price target fell 8.2% to AU$1.54, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Beach Energy analyst has a price target of AU$2.50 per share, while the most pessimistic values it at AU$1.25. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 2.1% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 27% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.2% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Beach Energy is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Beach Energy.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Beach Energy analysts - going out to 2024, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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