Analyst Forecasts Just Became More Bearish On PHX Minerals Inc. (NYSE:PHX)

The analysts covering PHX Minerals Inc. (NYSE:PHX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from PHX Minerals' twin analysts is for revenues of US$55m in 2023, which would reflect a definite 17% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of US$63m in 2023. The consensus view seems to have become more pessimistic on PHX Minerals, noting the substantial drop in revenue estimates in this update.

Check out our latest analysis for PHX Minerals

There was no particular change to the consensus price target of US$5.53, with PHX Minerals' latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on PHX Minerals, with the most bullish analyst valuing it at US$7.00 and the most bearish at US$4.00 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.

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. One more thing stood out to us about these estimates, and it's the idea that PHX Minerals' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 17% to the end of 2023. This tops off a historical decline of 0.6% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue shrink 6.2% per year. While this is interesting, PHX Minerals', 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 is that analysts cut their revenue estimates for this year. The analysts also expect revenues to shrink faster than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of PHX Minerals going forwards.

There might be good reason for analyst bearishness towards PHX Minerals, like concerns around earnings quality. For more information, you can click here to discover this and the 2 other concerns 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 downgrading 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.