Analysts Just Shipped A Sizeable Upgrade To Their Galp Energia, SGPS, S.A. (ELI:GALP) Estimates

Galp Energia, SGPS, S.A. (ELI:GALP) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the 17 analysts covering Galp Energia SGPS are now predicting revenues of €28b in 2022. If met, this would reflect a major 50% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of €1.64 per share this year. Before this latest update, the analysts had been forecasting revenues of €24b and earnings per share (EPS) of €1.00 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Galp Energia SGPS

Despite these upgrades, the analysts have not made any major changes to their price target of €13.74, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Galp Energia SGPS analyst has a price target of €17.00 per share, while the most pessimistic values it at €10.00. 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 Galp Energia SGPS shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Galp Energia SGPS' past performance and to peers in the same industry. One thing stands out from these estimates, which is that Galp Energia SGPS is forecast to grow faster in the future than it has in the past, with revenues expected to display 126% annualised growth until the end of 2022. If achieved, this would be a much better result than the 2.2% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to decline 4.4% per year. So it's pretty clear that Galp Energia SGPS 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. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Galp Energia SGPS could be a good candidate for more research.

Analysts are definitely bullish on Galp Energia SGPS, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including the risk of cutting its dividend. You can learn more, and discover the 1 other risk 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 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.