Viper Energy, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

It's been a good week for Viper Energy, Inc. (NASDAQ:VNOM) shareholders, because the company has just released its latest second-quarter results, and the shares gained 3.5% to US$44.18. It looks like a credible result overall - although revenues of US$217m were what the analysts expected, Viper Energy surprised by delivering a (statutory) profit of US$0.62 per share, an impressive 51% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Viper Energy

Following last week's earnings report, Viper Energy's seven analysts are forecasting 2024 revenues to be US$882.3m, approximately in line with the last 12 months. Statutory earnings per share are forecast to nosedive 36% to US$1.66 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$866.4m and earnings per share (EPS) of US$1.99 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$45.36, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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 Viper Energy at US$55.00 per share, while the most bearish prices it at US$40.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.3% by the end of 2024. This indicates a significant reduction from annual growth of 28% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Viper Energy is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Viper Energy's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Viper Energy going out to 2026, and you can see them free on our platform here.

Even so, be aware that Viper Energy is showing 2 warning signs in our investment analysis , and 1 of those is significant...

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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.