Stock Analysis

New Forecasts: Here's What Analysts Think The Future Holds For Patterson-UTI Energy, Inc. (NASDAQ:PTEN)

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Shareholders in Patterson-UTI Energy, Inc. (NASDAQ:PTEN) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Patterson-UTI Energy has also found favour with investors, with the stock up a notable 15% to US$7.39 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After the upgrade, the twelve analysts covering Patterson-UTI Energy are now predicting revenues of US$1.2b in 2021. If met, this would reflect a sizeable 29% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$1.1b in 2021. So there's been a pretty clear uptick in analyst sentiment after this consensus update, given the small increase to this year's revenue forecasts.

View our latest analysis for Patterson-UTI Energy

NasdaqGS:PTEN Earnings and Revenue Growth May 4th 2021

We'd point out that there was no major changes to their price target of US$7.15, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Patterson-UTI Energy analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$4.50. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Patterson-UTI Energy's rate of growth is expected to accelerate meaningfully, with the forecast 40% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 5.7% 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 9.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Patterson-UTI Energy is expected to grow much faster than its industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Patterson-UTI Energy this year. Analysts also expect revenues to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Patterson-UTI Energy.

Thirsting for more data? We have analyst estimates for Patterson-UTI Energy going out to 2025, 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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