Need To Know: Analysts Are Much More Bullish On NuVista Energy Ltd. (TSE:NVA)

Shareholders in NuVista Energy Ltd. (TSE:NVA) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term 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.

Following the upgrade, the latest consensus from NuVista Energy's three analysts is for revenues of CA$1.3b in 2022, which would reflect a huge 29% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 28% to CA$1.79. Previously, the analysts had been modelling revenues of CA$1.0b and earnings per share (EPS) of CA$1.58 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for NuVista Energy

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of CA$15.77, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic NuVista Energy analyst has a price target of CA$18.50 per share, while the most pessimistic values it at CA$13.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that NuVista Energy's rate of growth is expected to accelerate meaningfully, with the forecast 41% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 16% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that NuVista Energy is expected to grow much faster than its 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 upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So NuVista Energy could be a good candidate for more research.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for NuVista Energy going out to 2023, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.