Analysts Are More Bearish On EnLink Midstream, LLC (NYSE:ENLC) Than They Used To Be

Market forces rained on the parade of EnLink Midstream, LLC (NYSE:ENLC) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the three analysts covering EnLink Midstream, is for revenues of US$7.7b in 2023, which would reflect an uncomfortable 15% reduction in EnLink Midstream's sales over the past 12 months. Statutory earnings per share are anticipated to crater 45% to US$0.45 in the same period. Before this latest update, the analysts had been forecasting revenues of US$9.6b and earnings per share (EPS) of US$0.54 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for EnLink Midstream

Analysts made no major changes to their price target of US$13.50, suggesting the downgrades are not expected to have a long-term impact on EnLink Midstream's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on EnLink Midstream, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$12.00 per share. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 20% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 5.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 3.6% annually for the foreseeable future. So it's pretty clear that EnLink Midstream's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of EnLink Midstream.

There might be good reason for analyst bearishness towards EnLink Midstream, like recent substantial insider selling. For more information, you can click here to discover this and the 2 other risks we've identified.

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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.