These Analysts Just Made An Downgrade To Their Gulf Keystone Petroleum Limited (LON:GKP) EPS Forecasts

Today is shaping up negative for Gulf Keystone Petroleum Limited (LON:GKP) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, Gulf Keystone Petroleum's five analysts currently expect revenues in 2024 to be US$124m, approximately in line with the last 12 months. Per-share losses are expected to explode, reaching US$0.065 per share. Prior to this update, the analysts had been forecasting revenues of US$188m and earnings per share (EPS) of US$0.54 in 2024. There looks to have been a major change in sentiment regarding Gulf Keystone Petroleum's prospects, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for Gulf Keystone Petroleum

There was no major change to the consensus price target of US$2.30, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Gulf Keystone Petroleum at US$3.35 per share, while the most bearish prices it at US$1.26. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Gulf Keystone Petroleum's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 0.01% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 10% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.6% annually for the foreseeable future. The forecasts do look comparatively optimistic for Gulf Keystone Petroleum, since they're expecting it to shrink slower than the industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Gulf Keystone Petroleum to become unprofitable this year. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Gulf Keystone Petroleum.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Gulf Keystone Petroleum analysts - going out to 2026, 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.