This Just In: Analysts Are Boosting Their Magnolia Oil & Gas Corporation (NYSE:MGY) Outlook for This Year

Celebrations may be in order for Magnolia Oil & Gas Corporation (NYSE:MGY) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

After the upgrade, the twelve analysts covering Magnolia Oil & Gas are now predicting revenues of US$1.4b in 2022. If met, this would reflect a huge 26% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 54% to US$2.82. Previously, the analysts had been modelling revenues of US$1.2b and earnings per share (EPS) of US$2.34 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Magnolia Oil & Gas

It will come as no surprise to learn that the analysts have increased their price target for Magnolia Oil & Gas 7.1% to US$26.38 on the back of these upgrades. 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. There are some variant perceptions on Magnolia Oil & Gas, with the most bullish analyst valuing it at US$29.50 and the most bearish at US$21.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. For example, we noticed that Magnolia Oil & Gas' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 26% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 13% a year over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 2.6% annually. Not only are Magnolia Oil & Gas' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Magnolia Oil & Gas could be worth investigating further.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Magnolia Oil & Gas going out to 2024, 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.