Enerplus Corporation (TSE:ERF) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Enerplus will make substantially more sales than they'd previously expected.
After the upgrade, the two analysts covering Enerplus are now predicting revenues of CA$1.9b in 2021. If met, this would reflect a sizeable 173% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$1.6b of revenue in 2021. The consensus has definitely become more optimistic, showing a nice increase in revenue forecasts.
Additionally, the consensus price target for Enerplus increased 5.9% to CA$8.58, showing a clear increase in optimism from the analysts involved. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Enerplus, with the most bullish analyst valuing it at CA$10.00 and the most bearish at CA$4.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Enerplus' growth to accelerate, with the forecast 173% annualised growth to the end of 2021 ranking favourably alongside historical growth of 7.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Enerplus is expected to grow much faster than its industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Enerplus this year. They're also forecasting more rapid revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Enerplus.
It's great to see the analysts upgrading their estimates, but the biggest highlight to us is that the business is expected to become profitable in the foreseeable future. You can learn more about these forecasts, for free on our platform here.
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