Cooper Energy Limited (ASX:COE) Analysts Are Way More Bearish Than They Used To Be

Market forces rained on the parade of Cooper Energy Limited (ASX:COE) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After this downgrade, Cooper Energy's nine analysts are now forecasting revenues of AU$134m in 2021. This would be a sizeable 71% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 92% to AU$0.0043. Previously, the analysts had been modelling revenues of AU$151m and earnings per share (EPS) of AU$0.0018 in 2021. There looks to have been a major change in sentiment regarding Cooper Energy's prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for Cooper Energy

The consensus price target fell 6.5% to AU$0.43, implicitly signalling that lower earnings per share are a leading indicator for Cooper Energy's 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. The most optimistic Cooper Energy analyst has a price target of AU$0.50 per share, while the most pessimistic values it at AU$0.30. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Cooper Energy shareholders.

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 Cooper Energy's growth to accelerate, with the forecast 71% growth ranking favourably alongside historical growth of 27% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Cooper Energy is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Cooper Energy to become unprofitable this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Cooper Energy.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Cooper Energy going out to 2023, 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. 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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