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New Forecasts: Here's What Analysts Think The Future Holds For Woodside Energy Group Ltd (ASX:WDS)

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Woodside Energy Group Ltd (ASX:WDS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. The stock price has risen 9.5% to AU$34.82 over the past week, suggesting investors are becoming more optimistic. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

After this upgrade, Woodside Energy Group's nine analysts are now forecasting revenues of US$13b in 2022. This would be a sizeable 90% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$8.4b in 2022. It looks like there's been a clear increase in optimism around Woodside Energy Group, given the chunky increase in revenue forecasts.

See our latest analysis for Woodside Energy Group

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

The consensus price target rose 5.4% to US$25.40, with the analysts clearly more optimistic about Woodside Energy Group's prospects following this update. 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 Woodside Energy Group at US$40.14 per share, while the most bearish prices it at US$29.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. The analysts are definitely expecting Woodside Energy Group's growth to accelerate, with the forecast 135% annualised growth to the end of 2022 ranking favourably alongside historical growth of 4.4% per annum 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 9.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Woodside Energy Group to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. Analysts also expect revenues to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Woodside Energy Group.

Analysts are clearly in love with Woodside Energy Group at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as major dilution from new stock issuance in the past year. You can learn more, and discover the 1 other warning sign we've identified, for 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 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.