Growth Investors: Industry Analysts Just Upgraded Their Vermilion Energy Inc. (TSE:VET) Revenue Forecasts By 12%
Shareholders in Vermilion Energy Inc. (TSE:VET) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for next year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. The market may be pricing in some blue sky too, with the share price gaining 11% to CA$17.68 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
After the upgrade, the three analysts covering Vermilion Energy are now predicting revenues of CA$2.2b in 2022. If met, this would reflect a huge 49% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$2.0b in 2022. The consensus has definitely become more optimistic, showing a substantial gain in revenue forecasts.
See our latest analysis for Vermilion Energy
Additionally, the consensus price target for Vermilion Energy increased 6.7% to CA$18.14, showing a clear increase in optimism from the analysts involved. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Vermilion Energy analyst has a price target of CA$30.00 per share, while the most pessimistic values it at CA$13.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the 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 Vermilion Energy's rate of growth is expected to accelerate meaningfully, with the forecast 38% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 6.8% 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 6.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Vermilion Energy is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for next year. Analysts also expect revenues to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at Vermilion Energy.
Analysts are definitely bullish on Vermilion Energy, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. You can learn more, and discover the 4 other warning signs we've identified, for free on our platform here.
You can also see our analysis of Vermilion Energy's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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.
