Stock Analysis

News Flash: Analysts Just Made A Notable Upgrade To Their Gulf Keystone Petroleum Limited (LON:GKP) Forecasts

  •  Updated
LSE:GKP
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Gulf Keystone Petroleum Limited (LON:GKP) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

After this upgrade, Gulf Keystone Petroleum's six analysts are now forecasting revenues of US$237m in 2021. This would be a sizeable 118% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.17 in per-share earnings. Before this latest update, the analysts had been forecasting revenues of US$198m and earnings per share (EPS) of US$0.16 in 2021. The most recent forecasts are noticeably more optimistic, with a substantial gain in revenue estimates and a lift to earnings per share as well.

See our latest analysis for Gulf Keystone Petroleum

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LSE:GKP Earnings and Revenue Growth April 9th 2021

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$3.78, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. There are some variant perceptions on Gulf Keystone Petroleum, with the most bullish analyst valuing it at US$4.34 and the most bearish at US$1.92 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. The analysts are definitely expecting Gulf Keystone Petroleum's growth to accelerate, with the forecast 118% annualised growth to the end of 2021 ranking favourably alongside historical growth of 3.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Gulf Keystone Petroleum is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better 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 Gulf Keystone Petroleum.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Gulf Keystone Petroleum going out to 2023, 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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