New Forecasts: Here's What Analysts Think The Future Holds For TGS ASA (OB:TGS)

TGS ASA (OB:TGS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that TGS will make substantially more sales than they'd previously expected. TGS has also found favour with investors, with the stock up a remarkable 15% to kr184 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the current consensus from TGS' five analysts is for revenues of US$1.1b in 2023 which - if met - would reflect a substantial 79% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$1.39 per share next year. Previously, the analysts had been modelling revenues of US$975m and earnings per share (EPS) of US$1.34 in 2023. The forecasts seem more optimistic now, with a substantial gain in revenue and a small increase to earnings per share estimates.

View our latest analysis for TGS

Despite these upgrades, the analysts have not made any major changes to their price target of US$18.25, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic TGS analyst has a price target of US$210 per share, while the most pessimistic values it at US$157. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that TGS' rate of growth is expected to accelerate meaningfully, with the forecast 59% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 0.5% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that TGS is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at TGS.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for TGS 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.