Brokers Are Upgrading Their Views On Repsol, S.A. (BME:REP) With These New Forecasts

By
Simply Wall St
Published
May 08, 2022
BME:REP
Source: Shutterstock

Repsol, S.A. (BME:REP) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

After the upgrade, the 22 analysts covering Repsol are now predicting revenues of €66b in 2022. If met, this would reflect a sizeable 28% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 24% to €2.70. Previously, the analysts had been modelling revenues of €56b and earnings per share (EPS) of €2.30 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.

Check out our latest analysis for Repsol

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BME:REP Earnings and Revenue Growth May 8th 2022

Despite these upgrades, the analysts have not made any major changes to their price target of €15.13, 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 Repsol, with the most bullish analyst valuing it at €19.00 and the most bearish at €10.70 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. The analysts are definitely expecting Repsol's growth to accelerate, with the forecast 38% annualised growth to the end of 2022 ranking favourably alongside historical growth of 1.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.8% annually. It seems obvious that as part of the brighter growth outlook, Repsol is expected to grow faster than the wider industry.

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. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better 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 Repsol 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. We have estimates - from multiple Repsol analysts - going out to 2024, and you can see them free on our platform here.

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.

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