Some Analysts Just Cut Their Comstock Resources, Inc. (NYSE:CRK) Estimates

The latest analyst coverage could presage a bad day for Comstock Resources, Inc. (NYSE:CRK), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 6.0% to US$12.34 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After the downgrade, the consensus from Comstock Resources' seven analysts is for revenues of US$2.2b in 2023, which would reflect a substantial 35% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of US$2.5b in 2023. It looks like forecasts have become a fair bit less optimistic on Comstock Resources, given the measurable cut to revenue estimates.

See our latest analysis for Comstock Resources

There was no particular change to the consensus price target of US$15.14, with Comstock Resources' latest outlook seemingly not enough to result in a change of valuation. 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 Comstock Resources analyst has a price target of US$21.00 per share, while the most pessimistic values it at US$10.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 35% by the end of 2023. This indicates a significant reduction from annual growth of 49% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 5.5% per year. The forecasts do look bearish for Comstock Resources, since they're expecting it to shrink faster than the industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Comstock Resources this year. They're also forecasting for revenues to shrink at a quicker rate than companies in the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Comstock Resources after today.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on Comstock Resources' mountain of debt, which could lead to some belt tightening for shareholders. See why we're concerned about Comstock Resources' balance sheet by visiting our risks dashboard for free on our platform here.

We also provide an overview of the Comstock Resources Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.