Upgrade: Analysts Just Made A Meaningful Increase To Their SBM Offshore N.V. (AMS:SBMO) Forecasts

Celebrations may be in order for SBM Offshore N.V. (AMS:SBMO) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Investor sentiment seems to be improving too, with the share price up 5.5% to €12.48 over the past 7 days. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

After the upgrade, the consensus from SBM Offshore's four analysts is for revenues of US$4.1b in 2023, which would reflect a definite 18% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to be US$1.82, approximately in line with the last 12 months. Before this latest update, the analysts had been forecasting revenues of US$3.4b and earnings per share (EPS) of US$0.81 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for SBM Offshore

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$20.61, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. Currently, the most bullish analyst values SBM Offshore at US$26.77 per share, while the most bearish prices it at US$16.90. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 32% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SBM Offshore is expected to lag the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So SBM Offshore could be a good candidate for more research.

Analysts are definitely bullish on SBM Offshore, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including its declining profit margins. You can learn more, and discover the 2 other risks we've identified, for 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.