Penn Virginia Corporation (NASDAQ:PVAC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
Following the upgrade, the latest consensus from Penn Virginia's three analysts is for revenues of US$432m in 2021, which would reflect a huge 67% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$403m of revenue in 2021. So there's been a pretty clear uptick in analyst sentiment after this consensus update, given the modest lift to this year's revenue forecasts.
The consensus price target rose 5.3% to US$32.00, with the analysts clearly more optimistic about Penn Virginia's prospects following this update. 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. There are some variant perceptions on Penn Virginia, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$28.00 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
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. The analysts are definitely expecting Penn Virginia's growth to accelerate, with the forecast 98% annualised growth to the end of 2021 ranking favourably alongside historical growth of 20% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Penn Virginia 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 an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Penn Virginia.
That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Penn Virginia to be able to reach break-even within the next few years. You can learn more about these forecasts, for free on our platform here.
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