Newsflash: Gulf Keystone Petroleum Limited (LON:GKP) Analysts Have Been Trimming Their Revenue Forecasts

The latest analyst coverage could presage a bad day for Gulf Keystone Petroleum Limited (LON:GKP), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Gulf Keystone Petroleum's five analysts is for revenues of US$167m in 2023, which would reflect a disturbing 40% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$199m of revenue in 2023. The consensus view seems to have become more pessimistic on Gulf Keystone Petroleum, noting the substantial drop in revenue estimates in this update.

View our latest analysis for Gulf Keystone Petroleum

Notably, the analysts have cut their price target 10% to US$2.36, suggesting concerns around Gulf Keystone Petroleum's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Gulf Keystone Petroleum at US$3.35 per share, while the most bearish prices it at US$1.25. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 40% by the end of 2023. This indicates a significant reduction from annual growth of 15% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 1.7% per year. So it's pretty clear that Gulf Keystone Petroleum's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Gulf Keystone Petroleum this year. The analysts also expect revenues to shrink faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Gulf Keystone Petroleum's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Gulf Keystone Petroleum going forwards.

Looking for more information? We have estimates for Gulf Keystone Petroleum from its five analysts out until 2025, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.