Analysts Have Just Cut Their Genel Energy plc (LON:GENL) Revenue Estimates By 15%

One thing we could say about the analysts on Genel Energy plc (LON:GENL) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the four analysts covering Genel Energy, is for revenues of US$209m in 2023, which would reflect a concerning 52% reduction in Genel Energy's sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$246m in 2023. It looks like forecasts have become a fair bit less optimistic on Genel Energy, given the measurable cut to revenue estimates.

Check out our latest analysis for Genel Energy

There was no particular change to the consensus price target of US$2.22, with Genel Energy's latest outlook seemingly not enough to result in a change of valuation. 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 Genel Energy at US$2.25 per share, while the most bearish prices it at US$1.54. 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 Genel Energy shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 52% by the end of 2023. This indicates a significant reduction from annual growth of 4.1% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 2.6% per year. The forecasts do look bearish for Genel Energy, since they're expecting it to shrink faster than the industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Genel Energy this year. They're also forecasting for revenues to shrink at a quicker rate than companies in the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Genel Energy after today.

Of course, there's always more to the story. We have estimates for Genel Energy from its four analysts out until 2025, 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 downgrading their estimates. So you may also wish to search this free list of stocks 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.