These Analysts Think Aker BP ASA's (OB:AKRBP) Sales Are Under Threat

One thing we could say about the analysts on Aker BP ASA (OB:AKRBP) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the latest consensus from Aker BP's twelve analysts is for revenues of US$13b in 2022, which would reflect a major 64% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 145% to US$5.02. Before this latest update, the analysts had been forecasting revenues of US$14b and earnings per share (EPS) of US$5.04 in 2022. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.

Check out our latest analysis for Aker BP

The consensus has reconfirmed its price target of kr377, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on Aker BP's market value. 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. There are some variant perceptions on Aker BP, with the most bullish analyst valuing it at kr460 and the most bearish at kr275 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.

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. The analysts are definitely expecting Aker BP's growth to accelerate, with the forecast 171% annualised growth to the end of 2022 ranking favourably alongside historical growth of 18% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 10% per year. It seems obvious that as part of the brighter growth outlook, Aker BP is expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Aker BP going forwards.

That said, the analysts might have good reason to be negative on Aker BP, given major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 1 other flag we've identified.

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

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

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.