Need To Know: Analysts Are Much More Bullish On BW Energy Limited (OB:BWE)

BW Energy Limited (OB:BWE) 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.

Following the upgrade, the latest consensus from BW Energy's four analysts is for revenues of US$335m in 2022, which would reflect a major 33% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 109% to US$0.39. Previously, the analysts had been modelling revenues of US$284m and earnings per share (EPS) of US$0.29 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for BW Energy

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$4.29, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on BW Energy, with the most bullish analyst valuing it at US$49.48 and the most bearish at US$32.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. It's clear from the latest estimates that BW Energy's rate of growth is expected to accelerate meaningfully, with the forecast 78% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 10% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 10.0% annually. It seems obvious that as part of the brighter growth outlook, BW Energy is expected to grow faster than the wider 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. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better 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 BW Energy.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple BW 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.