Stock Analysis

Industry Analysts Just Made A Captivating Upgrade To Their Frontline Ltd. (NYSE:FRO) Revenue Forecasts

  •  Updated
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Frontline Ltd. (NYSE:FRO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Frontline will make substantially more sales than they'd previously expected. Investor sentiment seems to be improving too, with the share price up 5.7% to US$12.43 over the past 7 days. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the latest upgrade, the eight analysts covering Frontline provided consensus estimates of US$719m revenue in 2022, which would reflect a stressful 20% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$627m of revenue in 2022. The consensus has definitely become more optimistic, showing a substantial gain in revenue forecasts.

View our latest analysis for Frontline

NYSE:FRO Earnings and Revenue Growth August 30th 2022

The consensus price target rose 5.4% to US$11.63, with the analysts clearly more optimistic about Frontline's prospects following this update. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Frontline analyst has a price target of US$14.00 per share, while the most pessimistic values it at US$7.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 37% by the end of 2022. This indicates a significant reduction from annual growth of 7.3% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 6.7% per year. So it's pretty clear that Frontline's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. Analysts also expect revenues to shrink faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Frontline.

Analysts are definitely bullish on Frontline, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. You can learn more, and discover the 2 other concerns we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether Frontline is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Frontline Ltd., a shipping company, engages in the seaborne transportation of crude oil and oil products worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth5
Past Performance3
Financial Health1

Read more about these checks in the individual report sections or in our analysis model.

High growth potential with acceptable track record.