News Flash: Analysts Just Made A Meaningful Upgrade To Their BP p.l.c. (LON:BP.) Forecasts

By
Simply Wall St
Published
May 13, 2022
LSE:BP.
Source: Shutterstock

Shareholders in BP p.l.c. (LON:BP.) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

After this upgrade, BP's 20 analysts are now forecasting revenues of US$187b in 2022. This would be a solid 9.4% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$153b of revenue in 2022. It looks like there's been a clear increase in optimism around BP, given the considerable lift to revenue forecasts.

Check out our latest analysis for BP

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LSE:BP. Earnings and Revenue Growth May 13th 2022

There was no particular change to the consensus price target of US$6.08, with BP's latest outlook seemingly not enough to result in a change of valuation. 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 BP, with the most bullish analyst valuing it at US$7.11 and the most bearish at US$3.81 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await BP shareholders.

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. One thing stands out from these estimates, which is that BP is forecast to grow faster in the future than it has in the past, with revenues expected to display 13% annualised growth until the end of 2022. If achieved, this would be a much better result than the 13% annual decline over the past five years. What's also interesting is that our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue decline 1.5% annually for the foreseeable future. So although BP is expected to return to growth, it's also expected to grow revenues during a time when the wider industry is estimated to see revenue decline.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting for revenues to perform better than companies in 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 BP.

Better yet, BP is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. For more information, you can click through to our free platform to learn more about these forecasts.

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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