Shareholders in Pharos Energy plc (LON:PHAR) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the upgrade, the latest consensus from Pharos Energy's dual analysts is for revenues of US$243m in 2022, which would reflect a substantial 117% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$180m in 2022. It looks like there's been a clear increase in optimism around Pharos Energy, given the chunky increase in revenue forecasts.
Additionally, the consensus price target for Pharos Energy increased 9.0% to US$0.60, showing a clear increase in optimism from the analysts involved. 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. The most optimistic Pharos Energy analyst has a price target of US$0.60 per share, while the most pessimistic values it at US$0.30. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. One thing stands out from these estimates, which is that Pharos Energy is forecast to grow faster in the future than it has in the past, with revenues expected to display 117% annualised growth until the end of 2022. If achieved, this would be a much better result than the 0.07% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 2.4% annually. So it looks like Pharos Energy is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Pharos Energy.
Want to learn more? At least one of Pharos Energy's dual analysts has provided estimates out to 2023, which can be seen for 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.