Analysts Have Been Trimming Their Petronet LNG Limited (NSE:PETRONET) Price Target After Its Latest Report

Last week, you might have seen that Petronet LNG Limited (NSE:PETRONET) released its full-year result to the market. The early response was not positive, with shares down 5.4% to ₹232 in the past week. It was a pretty mixed result, with revenues beating expectations to hit ₹260b. Statutory earnings fell 3.4% short of analyst forecasts, reaching ₹19.59 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Petronet LNG

Taking into account the latest results, the consensus forecast from Petronet LNG's three analysts is for revenues of ₹362.9b in 2022, which would reflect a huge 39% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to reduce 2.8% to ₹19.04 in the same period. Before this earnings report, the analysts had been forecasting revenues of ₹357.1b and earnings per share (EPS) of ₹22.09 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target fell 7.6% to ₹282, with the analysts clearly linking lower forecast earnings to the performance of the stock price. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Petronet LNG, with the most bullish analyst valuing it at ₹351 and the most bearish at ₹213 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Petronet LNG's growth to accelerate, with the forecast 39% annualised growth to the end of 2022 ranking favourably alongside historical growth of 1.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Petronet LNG is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Petronet LNG. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Petronet LNG going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Petronet LNG you should be aware of.

If you’re looking to trade Petronet LNG, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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