Need To Know: Analysts Are Much More Bullish On RWE Aktiengesellschaft (ETR:RWE) Revenues

Celebrations may be in order for RWE Aktiengesellschaft (ETR:RWE) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

Following the upgrade, the consensus from 14 analysts covering RWE is for revenues of €37b in 2023, implying a discernible 3.2% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to decrease 2.6% to €3.56 in the same period. Previously, the analysts had been modelling revenues of €33b and earnings per share (EPS) of €3.49 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.

View our latest analysis for RWE

It may not be a surprise to see that the analysts have reconfirmed their price target of €51.23, implying that the uplift in sales is not expected to greatly contribute to RWE'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 RWE at €56.00 per share, while the most bearish prices it at €45.90. This is a very narrow spread of estimates, implying either that RWE is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 3.2% by the end of 2023. This indicates a significant reduction from annual growth of 24% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 0.09% per year. The forecasts do look bearish for RWE, since they're expecting it to shrink faster than the 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. Notably, analysts also upgraded their revenue estimates, with sales performing well although RWE's revenue growth is expected to trail that of the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at RWE.

Analysts are clearly in love with RWE at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as concerns around earnings quality. You can learn more, and discover the 2 other concerns we've identified, 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.