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Today is shaping up negative for Par Pacific Holdings, Inc. (NYSE:PARR) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the consensus from four analysts covering Par Pacific Holdings is for revenues of US$3.6b in 2020, implying a stressful 33% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$4.1b in 2020. The consensus view seems to have become more pessimistic on Par Pacific Holdings, noting the substantial drop in revenue estimates in this update.
Notably, the analysts have cut their price target 20% to US$10.40, suggesting concerns around Par Pacific Holdings' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Par Pacific Holdings at US$15.00 per share, while the most bearish prices it at US$8.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 33%, a significant reduction from annual growth of 20% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Par Pacific Holdings is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Par Pacific Holdings this year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Par Pacific Holdings' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Par Pacific Holdings after today.
Unanswered questions? We have estimates for Par Pacific Holdings from its four analysts out until 2022, and you can see them 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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