Forecast: Analysts Think Panoro Energy ASA's (OB:PEN) Business Prospects Have Improved Drastically

Celebrations may be in order for Panoro Energy ASA (OB:PEN) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 6.9% over the past week, closing at kr33.88. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the latest consensus from Panoro Energy's three analysts is for revenues of US$268m in 2022, which would reflect a substantial 124% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 96% to US$0.75. Before this latest update, the analysts had been forecasting revenues of US$236m and earnings per share (EPS) of US$0.66 in 2022. 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.

View our latest analysis for Panoro Energy

It will come as no surprise to learn that the analysts have increased their price target for Panoro Energy 13% to US$4.83 on the back of these upgrades. 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 Panoro Energy, with the most bullish analyst valuing it at US$45.00 and the most bearish at US$33.30 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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 Panoro Energy's rate of growth is expected to accelerate meaningfully, with the forecast 124% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 52% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 0.3% annually. So it's clear with the acceleration in growth, Panoro Energy is expected to grow meaningfully faster than 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 our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Panoro Energy.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 2 potential flag with Panoro Energy, including concerns around earnings quality. You can learn more, and discover the 1 other flag we've identified, for 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.