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Bonanza Creek Energy, Inc. (NYSE:BCEI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 9.6% over the past week, closing at US$39.92. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.
After the upgrade, the four analysts covering Bonanza Creek Energy are now predicting revenues of US$617m in 2021. If met, this would reflect a major 166% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$505m in 2021. The consensus has definitely become more optimistic, showing a sizeable gain to revenue forecasts.
The consensus price target rose 6.9% to US$51.83, with the analysts clearly more optimistic about Bonanza Creek Energy's prospects following this update. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Bonanza Creek Energy, with the most bullish analyst valuing it at US$66.00 and the most bearish at US$40.00 per share. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Bonanza Creek Energy's growth to accelerate, with the forecast 269% annualised growth to the end of 2021 ranking favourably alongside historical growth of 5.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Bonanza Creek 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 this year. They're also forecasting more rapid revenue growth 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. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Bonanza Creek Energy.
Analysts are definitely bullish on Bonanza Creek Energy, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including major dilution from new stock issuance in the past year. You can learn more, and discover the 5 other warning signs 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.
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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