What Does The Future Hold For Peyto Exploration & Development Corp. (TSE:PEY)? These Analysts Have Been Cutting Their Estimates

The latest analyst coverage could presage a bad day for Peyto Exploration & Development Corp. (TSE:PEY), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 6.8% to CA$12.43 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the latest downgrade, the current consensus, from the twin analysts covering Peyto Exploration & Development, is for revenues of CA$1.0b in 2023, which would reflect an uncomfortable 18% reduction in Peyto Exploration & Development's sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$1.2b in 2023. It looks like forecasts have become a fair bit less optimistic on Peyto Exploration & Development, given the substantial drop in revenue estimates.

See our latest analysis for Peyto Exploration & Development

We'd point out that there was no major changes to their price target of CA$14.82, suggesting the latest estimates were not enough to shift their view on the value of the business.

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. We would highlight that sales are expected to reverse, with a forecast 33% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 28% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.7% per year. It's pretty clear that Peyto Exploration & Development's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Peyto Exploration & Development this year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Peyto Exploration & Development after today.

Need some more information? We have estimates for Peyto Exploration & Development from its twin analysts out until 2024, and you can see them free on our platform here.

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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.