Brokers Are Upgrading Their Views On Kelt Exploration Ltd. (TSE:KEL) With These New Forecasts

Kelt Exploration Ltd. (TSE:KEL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.

After this upgrade, Kelt Exploration's dual analysts are now forecasting revenues of CA$229m in 2021. This would be a solid 16% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of CA$0.04 per share this year. Before this latest update, the analysts had been forecasting revenues of CA$200m and earnings per share (EPS) of CA$0.03 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for Kelt Exploration

It will come as no surprise to learn that the analysts have increased their price target for Kelt Exploration 22% to CA$3.89 on the back of these upgrades. 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 Kelt Exploration, with the most bullish analyst valuing it at CA$4.50 and the most bearish at CA$3.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Kelt Exploration'shistorical trends, as the 16% annualised revenue growth to the end of 2021 is roughly in line with the 15% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 11% annually. So although Kelt Exploration is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Kelt Exploration could be worth investigating further.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Kelt Exploration going out as far as 2022, 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

When trading Kelt Exploration or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.