Results: Ithaca Energy plc Beat Earnings Expectations And Analysts Now Have New Forecasts

Last week saw the newest second-quarter earnings release from Ithaca Energy plc (LON:ITH), an important milestone in the company's journey to build a stronger business. It was a curious result overall, with revenues coming in an incredible 22% below what the analysts had expected, at US$359m. Statutory earnings per share beat analyst models by 24% to hit US$0.062. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Ithaca Energy

After the latest results, the consensus from Ithaca Energy's six analysts is for revenues of US$1.67b in 2024, which would reflect a definite 13% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to dive 75% to US$0.04 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.10b and earnings per share (EPS) of US$0.17 in 2024. Indeed, we can see that the analysts are a lot more bearish about Ithaca Energy's prospects following the latest results, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

Despite the cuts to forecast earnings, there was no real change to the UK£1.51 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic Ithaca Energy analyst has a price target of UK£2.14 per share, while the most pessimistic values it at UK£1.12. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. We would highlight that revenue is expected to reverse, with a forecast 24% annualised decline to the end of 2024. That is a notable change from historical growth of 28% 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 0.7% annually for the foreseeable future. The forecasts do look bearish for Ithaca Energy, since they're expecting it to shrink faster than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ithaca Energy. Unfortunately they also downgraded their revenue estimates, and our analysts estimates suggest that Ithaca Energy is still expected to perform worse than the wider industry. The consensus price target held steady at UK£1.51, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Ithaca Energy going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Ithaca Energy , and understanding them should be part of your investment process.

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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.