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Shareholders in NexTier Oilfield Solutions Inc. (NYSE:NEX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the latest upgrade, the ten analysts covering NexTier Oilfield Solutions provided consensus estimates of US$1.1b revenue in 2021, which would reflect a noticeable 5.2% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 49% to US$0.83. However, before this estimates update, the consensus had been expecting revenues of US$1.0b and US$0.96 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
Despite these upgrades, the analysts have not made any major changes to their price target of US$4.49, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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 NexTier Oilfield Solutions, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$3.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. We would highlight that sales are expected to reverse, with the forecast 5.2% revenue decline a notable change from historical growth of 26% 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 6.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - NexTier Oilfield Solutions is expected to lag the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting NexTier Oilfield Solutions is moving incrementally towards profitability. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So NexTier Oilfield Solutions could be a good candidate for more research.
That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect NexTier Oilfield Solutions to be able to reach break-even within the next few years. For more information, you can click through to our free platform to learn more about these forecasts.
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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