Growth Investors: Industry Analysts Just Upgraded Their DNO ASA (OB:DNO) Revenue Forecasts By 13%

DNO ASA (OB:DNO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

After the upgrade, the consensus from DNO's four analysts is for revenues of US$1.2b in 2023, which would reflect a not inconsiderable 12% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to crater 31% to US$0.24 in the same period. Previously, the analysts had been modelling revenues of US$1.0b and earnings per share (EPS) of US$0.22 in 2023. Sentiment certainly seems to have improved in recent times, with a nice gain to revenue and a modest lift to earnings per share estimates.

See our latest analysis for DNO

Despite these upgrades, the analysts have not made any major changes to their price target of kr19.00, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 DNO, with the most bullish analyst valuing it at kr23.00 and the most bearish at kr13.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await DNO shareholders.

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. We would highlight that sales are expected to reverse, with a forecast 15% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 15% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 12% per year. The forecasts do look bearish for DNO, since they're expecting it to shrink faster than the 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, with sales apparently performing well even though revenue growth expected to decline against the wider market this year. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at DNO.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple DNO analysts - going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.