Shareholders in National Grid plc (LON:NG.) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the latest upgrade, National Grid's 13 analysts currently expect revenues in 2024 to be UK£22b, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£19b in 2024. The consensus has definitely become more optimistic, showing a solid increase in revenue forecasts.
There was no particular change to the consensus price target of UK£11.42, with National Grid's latest outlook seemingly not enough to result in a change of valuation. 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 National Grid at UK£13.00 per share, while the most bearish prices it at UK£9.10. 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.
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. We would highlight that sales are expected to reverse, with a forecast 0.5% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 7.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 0.4% annually for the foreseeable future. So it's pretty clear that National Grid's revenues are expected to shrink faster than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for National Grid this year. They're also forecasting for revenues to shrink at a quicker rate than companies in the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at National Grid.
But wait - there's more! We have analyst estimates for National Grid going out to 2026, 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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