Analyst Forecasts Just Became More Bearish On Imperial Oil Limited (TSE:IMO)

Today is shaping up negative for Imperial Oil Limited (TSE:IMO) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following this downgrade, Imperial Oil's six analysts are forecasting 2024 revenues to be CA$50b, approximately in line with the last 12 months. Statutory earnings per share are expected to be CA$9.26, roughly flat on the last 12 months. Prior to this update, the analysts had been forecasting revenues of CA$50b and earnings per share (EPS) of CA$8.97 in 2024. So the consensus seems to have become somewhat more optimistic on Imperial Oil'searnings potential following these updates.

Check out our latest analysis for Imperial Oil

There's been no major changes to the consensus price target of CA$85.60, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Imperial Oil's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.7% by the end of 2024. This indicates a significant reduction from annual growth of 15% 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 5.6% annually for the foreseeable future. It's pretty clear that Imperial Oil's revenues are expected to perform substantially worse than the wider industry.

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. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data indicates that Imperial Oil's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Imperial Oil after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Imperial Oil analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.