Analysts Just Made A Huge Upgrade To Their Topaz Energy Corp. (TSE:TPZ) Forecasts

Shareholders in Topaz Energy Corp. (TSE:TPZ) 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 analysts modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 4.2% over the past week, closing at CA$23.72. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the most recent consensus for Topaz Energy from its five analysts is for revenues of CA$355m in 2022 which, if met, would be a major 39% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 204% to CA$0.71. Previously, the analysts had been modelling revenues of CA$319m and earnings per share (EPS) of CA$0.53 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.

View our latest analysis for Topaz Energy

Despite these upgrades, the analysts have not made any major changes to their price target of CA$28.79, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Topaz Energy, with the most bullish analyst valuing it at CA$33.00 and the most bearish at CA$26.00 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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. It's pretty clear that there is an expectation that Topaz Energy's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 55% growth on an annualised basis. This is compared to a historical growth rate of 122% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.2% annually. So it's pretty clear that, while Topaz Energy's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster 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 Topaz 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 Topaz 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.