Forecast: Analysts Think Seplat Energy Plc's (LON:SEPL) Business Prospects Have Improved Drastically

Seplat Energy Plc (LON:SEPL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

After the upgrade, the four analysts covering Seplat Energy are now predicting revenues of US$1.2b in 2022. If met, this would reflect a sizeable 64% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 23% to US$0.30. Prior to this update, the analysts had been forecasting revenues of US$927m and earnings per share (EPS) of US$0.26 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for Seplat Energy

Despite these upgrades, the analysts have not made any major changes to their price target of US$1.94, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. There are some variant perceptions on Seplat Energy, with the most bullish analyst valuing it at US$1.93 and the most bearish at US$1.14 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Seplat Energy's growth to accelerate, with the forecast 64% annualised growth to the end of 2022 ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Seplat Energy 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Seplat Energy.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Seplat Energy analysts - going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks 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.