Some Beach Energy Limited (ASX:BPT) Analysts Just Made A Major Cut To Next Year's Estimates

The analysts covering Beach Energy Limited (ASX:BPT) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the consensus from Beach Energy's 13 analysts is for revenues of AU$1.5b in 2022, which would reflect a small 2.1% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to accumulate 5.5% to AU$0.16. Prior to this update, the analysts had been forecasting revenues of AU$1.6b and earnings per share (EPS) of AU$0.19 in 2022. Indeed, we can see that the analysts are a lot more bearish about Beach Energy's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Beach Energy

It'll come as no surprise then, to learn that the analysts have cut their price target 8.2% to AU$1.54. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Beach Energy, with the most bullish analyst valuing it at AU$2.50 and the most bearish at AU$1.25 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 2.1% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 27% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Beach Energy is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Beach Energy. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Beach Energy's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Beach Energy.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Beach Energy going out to 2024, 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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