Rainbows and Unicorns: Nordic American Tankers Limited (NYSE:NAT) Analysts Just Became A Lot More Optimistic

Celebrations may be in order for Nordic American Tankers Limited (NYSE:NAT) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 6.5% over the past week, closing at US$3.75. Could this big upgrade push the stock even higher?

After the upgrade, the consensus from Nordic American Tankers' dual analysts is for revenues of US$182m in 2022, which would reflect an uneasy 15% decline in sales compared to the last year of performance. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$0.19 per share this year. However, before this estimates update, the consensus had been expecting revenues of US$152m and US$0.11 per share in losses. It looks like there's been a definite improvement in business conditions, with a revenue upgrade supposed to lead to profitability sooner than previously forecast.

See our latest analysis for Nordic American Tankers

It will come as no surprise to learn that the analysts have increased their price target for Nordic American Tankers 13% to US$4.50 on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Nordic American Tankers, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$3.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nordic American Tankers' past performance and to peers in the same industry. Over the past five years, revenues have declined around 6.2% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 28% decline in revenue until the end of 2022. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to decline 7.0% annually. While this is interesting, Nordic American Tankers', revenues are still expected to shrink next year, and at a faster rate than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that there is now an expectation for Nordic American Tankers to become profitable this year, compared to previous expectations of a loss. They also upgraded their revenue estimates, with sales apparently performing well even though revenue growth expected to decline against the wider market this year. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Nordic American Tankers.

Analysts are definitely bullish on Nordic American Tankers, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including a short cash runway. For more information, you can click through to our platform to learn more about this and the 1 other flag 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 upgrading 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.