Analyst Forecasts Just Became More Bearish On Naturgy Energy Group, S.A. (BME:NTGY)

The analysts covering Naturgy Energy Group, S.A. (BME:NTGY) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory 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.

Following the latest downgrade, the twelve analysts covering Naturgy Energy Group provided consensus estimates of €25b revenue in 2023, which would reflect a painful 25% decline on its sales over the past 12 months. Statutory earnings per share are presumed to rise 5.2% to €1.83. Before this latest update, the analysts had been forecasting revenues of €30b and earnings per share (EPS) of €1.85 in 2023. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a substantial drop in revenues and some minor tweaks to earnings numbers.

See our latest analysis for Naturgy Energy Group

The consensus has reconfirmed its price target of €24.40, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on Naturgy Energy Group's market value. 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 Naturgy Energy Group at €28.30 per share, while the most bearish prices it at €16.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 44% by the end of 2023. This indicates a significant reduction from annual growth of 3.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 2.7% annually for the foreseeable future. The forecasts do look bearish for Naturgy Energy Group, 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. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Naturgy Energy Group revenue is expected to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Naturgy Energy Group after today.

That said, the analysts might have good reason to be negative on Naturgy Energy Group, given a weak balance sheet. For more information, you can click here to discover this and the 2 other flags we've identified.

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

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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.