Analyst Forecasts Just Became More Bearish On PDC Energy, Inc. (NASDAQ:PDCE)

Today is shaping up negative for PDC Energy, Inc. (NASDAQ:PDCE) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, PDC Energy's five analysts currently expect revenues in 2022 to be US$3.3b, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$3.7b in 2022. The consensus view seems to have become more pessimistic on PDC Energy, noting the substantial drop in revenue estimates in this update.

Check out our latest analysis for PDC Energy

There was no particular change to the consensus price target of US$100, with PDC Energy's latest outlook seemingly not enough to result in a change of valuation. 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. Currently, the most bullish analyst values PDC Energy at US$125 per share, while the most bearish prices it at US$70.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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 pretty clear that there is an expectation that PDC Energy's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 1.7% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 5.7% annually. So it's clear that despite the slowdown in growth, PDC Energy is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of PDC Energy going forwards.

A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. You can learn more about our debt analysis for free on our platform here.

You can also see our analysis of PDC Energy's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.