The AltaGas Ltd. (TSE:ALA) Analysts Have Been Trimming Their Sales Forecasts

Market forces rained on the parade of AltaGas Ltd. (TSE:ALA) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 4.9% to CA$26.03 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the latest downgrade, the eight analysts covering AltaGas provided consensus estimates of CA$12b revenue in 2023, which would reflect an uncomfortable 10% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing CA$14b of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on AltaGas, given the measurable cut to revenue estimates.

See our latest analysis for AltaGas

There was no particular change to the consensus price target of CA$31.31, with AltaGas' latest outlook seemingly not enough to result in a change of valuation. 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 AltaGas, with the most bullish analyst valuing it at CA$36.00 and the most bearish at CA$26.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await AltaGas shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 20% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 29% 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 1.8% per year. It's pretty clear that AltaGas' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on AltaGas after today.

Want more information? At least one of AltaGas' eight analysts has provided estimates out to 2025, which can be seen for 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.