Industry Analysts Just Made A Substantial Upgrade To Their AltaGas Ltd. (TSE:ALA) Revenue Forecasts

AltaGas Ltd. (TSE:ALA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that AltaGas will make substantially more sales than they'd previously expected.

Following the latest upgrade, the nine analysts covering AltaGas provided consensus estimates of CA$11b revenue in 2023, which would reflect a definite 16% decline on its sales over the past 12 months. Per-share earnings are expected to jump 86% to CA$2.03. Before this latest update, the analysts had been forecasting revenues of CA$10.0b and earnings per share (EPS) of CA$2.04 in 2023. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.

Check out the opportunities and risks within the XX Gas Utilities industry.

It may not be a surprise to see that the analysts have reconfirmed their price target of CA$32.20, implying that the uplift in sales is not expected to greatly contribute to AltaGas's valuation in the near term. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values AltaGas at CA$37.00 per share, while the most bearish prices it at CA$30.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 13% by the end of 2023. This indicates a significant reduction from annual growth of 31% 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 1.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - AltaGas is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at AltaGas.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential concerns with AltaGas, including its declining profit margins. For more information, you can click through to our platform to learn more about this and the 2 other concerns 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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

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.