Need To Know: Analysts Are Much More Bullish On Fortum Oyj (HEL:FORTUM) Revenues

Fortum Oyj (HEL:FORTUM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Fortum Oyj will make substantially more sales than they'd previously expected.

Following the upgrade, the consensus from eleven analysts covering Fortum Oyj is for revenues of €107b in 2022, implying a disturbing 21% decline in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of €1.70 per share this year. Before this latest update, the analysts had been forecasting revenues of €80b and earnings per share (EPS) of €1.60 in 2022. The forecasts seem more optimistic now, with a sizeable gain to revenue and a small increase to earnings per share estimates.

Check out our latest analysis for Fortum Oyj

Despite these upgrades, the analysts have not made any major changes to their price target of €21.92, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Fortum Oyj at €30.00 per share, while the most bearish prices it at €16.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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 27% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 71% 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 2.2% per year. It's pretty clear that Fortum Oyj'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 upgraded their earnings per share estimates for this year, expecting improving business conditions. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower 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 Fortum Oyj.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Fortum Oyj analysts - going out to 2024, and you can see them 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.