Time To Worry? Analysts Just Downgraded Their Gulfport Energy Corporation (NYSE:GPOR) Outlook

The analysts covering Gulfport Energy Corporation (NYSE:GPOR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the consensus from three analysts covering Gulfport Energy is for revenues of US$876m in 2022, implying a disturbing 40% decline in sales compared to the last 12 months. After this downgrade, the company is anticipated to report a loss of US$12.51 in 2022, a sharp decline from a profit over the last year. Before this latest update, the analysts had been forecasting revenues of US$1.3b and earnings per share (EPS) of US$18.68 in 2022. So we can see that the consensus has become notably more bearish on Gulfport Energy's outlook with these numbers, making a sizeable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Gulfport Energy

The consensus price target was broadly unchanged at US$118, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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 Gulfport Energy at US$125 per share, while the most bearish prices it at US$111. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Gulfport Energy is an easy business to forecast or the underlying assumptions are obvious.

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. We would highlight that sales are expected to reverse, with a forecast 50% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 4.2% 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 1.1% annually for the foreseeable future. So it's pretty clear that Gulfport Energy's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Gulfport Energy to become unprofitable this year. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Gulfport Energy revenue is expected to perform worse than the wider market. 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 Gulfport Energy.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Gulfport Energy going out to 2023, and you can see them 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.

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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.