One SeaBird Exploration Plc (OB:SBX) Analyst Just Cut Their EPS Forecasts

The analyst covering SeaBird Exploration Plc (OB:SBX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon. The stock price has risen 5.7% to kr7.00 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the latest downgrade, the current consensus, from the one analyst covering SeaBird Exploration, is for revenues of US$19m in 2021, which would reflect a concerning 60% reduction in SeaBird Exploration's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 48% to US$0.25. Yet prior to the latest estimates, the analyst had been forecasting revenues of US$28m and losses of US$0.07 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for SeaBird Exploration

The consensus price target fell 45% to US$0.96, with the analyst clearly concerned about the company following the weaker revenue and earnings outlook.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SeaBird Exploration's past performance and to peers in the same industry. Over the past five years, revenues have declined around 17% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 60% decline in revenue until the end of 2021. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 2.8% annually. So it's pretty clear that, while it does have declining revenues, the analyst also expect SeaBird Exploration to suffer worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at SeaBird Exploration. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that SeaBird Exploration's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of SeaBird Exploration.

There might be good reason for analyst bearishness towards SeaBird Exploration, like a short cash runway. Learn more, and discover the 2 other flags 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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