Newsflash: Parex Resources Inc. (TSE:PXT) Analysts Have Been Trimming Their Revenue Forecasts

The analysts covering Parex Resources Inc. (TSE:PXT) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the twin analysts covering Parex Resources provided consensus estimates of US$1.1b revenue in 2023, which would reflect a discernible 7.6% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plunge 22% to US$3.83 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.5b and earnings per share (EPS) of US$3.81 in 2023. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a pretty serious reduction to revenues and reconfirming their earnings per share estimates.

Check out our latest analysis for Parex Resources

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 sales are expected to reverse, with a forecast 15% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 9.7% 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 1.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Parex Resources is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Parex Resources going forwards.

There might be good reason for analyst bearishness towards Parex Resources, like concerns around earnings quality. For more information, you can click here to discover this and the 1 other warning sign we've identified.

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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