Analysts Just Made A Major Revision To Their Peninsula Energy Limited (ASX:PEN) Revenue Forecasts

The analysts covering Peninsula Energy Limited (ASX:PEN) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following this downgrade, Peninsula Energy's four analysts are forecasting 2025 revenues to be US$12m, approximately in line with the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$0.18 per share this year. Previously, the analysts had been modelling revenues of US$17m and earnings per share (EPS) of US$0.15 in 2025. Thus, there's been a definite swing in sentiment, with the analysts making a considerable reduction to this year's revenue estimates, while at the same time substantially upgrading EPS. It's almost as though the business is forecast to reduce its focus on growth to enhance profitability.

View our latest analysis for Peninsula Energy

The consensus price target fell 6.1% to AU$3.98, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Peninsula Energy's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 1.1% growth on an annualised basis. This is compared to a historical growth rate of 37% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.9% annually. Factoring in the forecast slowdown in growth, it seems obvious that Peninsula Energy is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Peninsula Energy after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Peninsula Energy's business, like major dilution from new stock issuance in the past year. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

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