Bullish: Analysts Just Made A Massive Upgrade To Their Range Resources Corporation (NYSE:RRC) Forecasts

Celebrations may be in order for Range Resources Corporation (NYSE:RRC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

Following the upgrade, the consensus from 19 analysts covering Range Resources is for revenues of US$3.2b in 2023, implying a concerning 50% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to plummet 60% to US$3.59 in the same period. Before this latest update, the analysts had been forecasting revenues of US$2.9b and earnings per share (EPS) of US$2.69 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for Range Resources

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$31.54, suggesting that the forecast performance does not have a long term impact on the company's 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. There are some variant perceptions on Range Resources, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$20.00 per share. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 60% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 10% 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 4.7% annually for the foreseeable future. The forecasts do look bearish for Range Resources, since they're expecting it to shrink faster than the 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, with sales apparently performing well even though revenue growth expected to decline against the wider market this year. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Range Resources.

Analysts are clearly in love with Range Resources at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as a weak balance sheet. You can learn more, and discover the 1 other concern we've identified, for free on our platform here.

You can also see our analysis of Range Resources' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.