Earnings Release: Here's Why Analysts Cut Their CVR Energy, Inc. (NYSE:CVI) Price Target To US$14.00
As you might know, CVR Energy, Inc. (NYSE:CVI) last week released its latest third-quarter, and things did not turn out so great for shareholders. It definitely looks like a negative result overall with revenues falling 11% short of analyst estimates at US$1.0b. Statutory losses were US$0.96 per share, 78% bigger than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for CVR Energy
Taking into account the latest results, the most recent consensus for CVR Energy from three analysts is for revenues of US$5.41b in 2021 which, if met, would be a substantial 23% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 74% to US$0.37. Before this earnings announcement, the analysts had been modelling revenues of US$5.43b and losses of US$0.55 per share in 2021. Although the revenue estimates have not really changed CVR Energy'sfuture looks a little different to the past, with a the loss per share forecasts in particular.
Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 15% to US$14.00. It looks likethe analysts have become less optimistic about the overall business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values CVR Energy at US$17.00 per share, while the most bearish prices it at US$11.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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 CVR Energy's rate of growth is expected to accelerate meaningfully, with the forecast 23% revenue growth noticeably faster than its historical growth of 3.2%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 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that CVR Energy is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for CVR Energy going out to 2022, and you can see them free on our platform here..
Even so, be aware that CVR Energy is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...
This article by Simply Wall St is general in nature. 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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