Analysts Are Updating Their Santos Limited (ASX:STO) Estimates After Its Half-Year Results

Last week, you might have seen that Santos Limited (ASX:STO) released its interim result to the market. The early response was not positive, with shares down 3.4% to AU$7.48 in the past week. Santos reported US$2.7b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.20 beat expectations, being 2.6% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Santos

Taking into account the latest results, the 14 analysts covering Santos provided consensus estimates of US$5.46b revenue in 2024, which would reflect a discernible 2.7% decline over the past 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$5.54b and earnings per share (EPS) of US$0.42 in 2024. Overall, while the analysts have reconfirmed their revenue estimates, the consensus now no longer provides an EPS estimate. This implies that the market believes revenue is more important after these latest results.

There's been no real change to the consensus price target of AU$8.57, with Santos seemingly executing in line with expectations. 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 Santos at AU$12.49 per share, while the most bearish prices it at AU$7.50. 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.3% by the end of 2024. This indicates a significant reduction from annual growth of 14% 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 7.0% annually for the foreseeable future. It's pretty clear that Santos' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their revenue estimates for next year, suggesting that the business is performing in line with expectations. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

At least one of Santos' 14 analysts has provided estimates out to 2026, which can be seen for free on our platform here.

It is also worth noting that we have found 1 warning sign for Santos that you need to take into consideration.

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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.