Things Look Grim For InPlay Oil Corp. (TSE:IPO) After Today's Downgrade

Market forces rained on the parade of InPlay Oil Corp. (TSE:IPO) shareholders today, when the analysts downgraded their forecasts for next year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the current consensus from InPlay Oil's three analysts is for revenues of CA$190m in 2024 which - if met - would reflect a decent 16% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to tumble 30% to CA$0.32 in the same period. Before this latest update, the analysts had been forecasting revenues of CA$211m and earnings per share (EPS) of CA$0.41 in 2024. Indeed, we can see that the analysts are a lot more bearish about InPlay Oil's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for InPlay Oil

It'll come as no surprise then, to learn that the analysts have cut their price target 8.9% to CA$4.39.

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. We would highlight that InPlay Oil's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2024 being well below the historical 28% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.5% per year. Even after the forecast slowdown in growth, it seems obvious that InPlay Oil is also expected to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for InPlay Oil. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of InPlay Oil.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with InPlay Oil, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other concerns we've identified.

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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.