New Forecasts: Here's What Analysts Think The Future Holds For Natural Gas Services Group, Inc. (NYSE:NGS)
Shareholders in Natural Gas Services Group, Inc. (NYSE:NGS) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the upgrade, the most recent consensus for Natural Gas Services Group from its two analysts is for revenues of US$105m in 2023 which, if met, would be a meaningful 15% increase on its sales over the past 12 months. Losses are supposed to balloon 203% to US$0.13 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$94m and losses of US$0.23 per share in 2023. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
Check out our latest analysis for Natural Gas Services Group
Despite these upgrades, the analysts have not made any major changes to their price target of US$22.50, implying that their latest estimates don't have a long term impact on what they think the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Natural Gas Services Group at US$26.00 per share, while the most bearish prices it at US$19.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Natural Gas Services Group's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 4.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.3% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Natural Gas Services Group to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Natural Gas Services Group is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Natural Gas Services Group.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Natural Gas Services Group going out as far as 2025, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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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