One VAALCO Energy, Inc. (NYSE:EGY) Analyst Just Slashed Their 2023 Revenue Estimates

Market forces rained on the parade of VAALCO Energy, Inc. (NYSE:EGY) shareholders today, when the covering analyst downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At US$4.40, shares are up 5.8% in the past 7 days. 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.

Following the downgrade, the current consensus from VAALCO Energy's sole analyst is for revenues of US$400m in 2023 which - if met - would reflect a decent 13% increase on its sales over the past 12 months. Before the latest update, the analyst was foreseeing US$569m of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on VAALCO Energy, given the pretty serious reduction to revenue estimates.

See our latest analysis for VAALCO Energy

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. We would highlight that VAALCO Energy's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2023 being well below the historical 32% p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 5.6% per year. So it's clear that despite the slowdown in growth, VAALCO Energy is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The clear low-light was that the analyst slashing their revenue forecasts for VAALCO Energy this year. They're also forecasting for revenues to perform better than companies in the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on VAALCO Energy after today.

As you can see, the covering analyst clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with VAALCO Energy's financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 2 other flags we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading 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.