Analysts Are Betting On Capital Power Corporation (TSE:CPX) With A Big Upgrade This Week

Capital Power Corporation (TSE:CPX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

Following the latest upgrade, the ten analysts covering Capital Power provided consensus estimates of CA$3.0b revenue in 2023, which would reflect a chunky 14% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing CA$2.5b of revenue in 2023. It looks like there's been a clear increase in optimism around Capital Power, given the decent improvement in revenue forecasts.

View our latest analysis for Capital Power

There was no particular change to the consensus price target of CA$51.38, with Capital Power's latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Capital Power at CA$57.00 per share, while the most bearish prices it at CA$48.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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. We would highlight that sales are expected to reverse, with a forecast 18% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 17% 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 3.5% per year. It's pretty clear that Capital Power's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Capital Power.

Analysts are definitely bullish on Capital Power, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including a weak balance sheet. You can learn more, and discover the 1 other risk we've identified, for free on our platform here.

You can also see our analysis of Capital Power's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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.