Brokers Are Upgrading Their Views On Scorpio Tankers Inc. (NYSE:STNG) With These New Forecasts

Shareholders in Scorpio Tankers Inc. (NYSE:STNG) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

Following the upgrade, the most recent consensus for Scorpio Tankers from its nine analysts is for revenues of US$1.2b in 2022 which, if met, would be a major 37% increase on its sales over the past 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$4.35 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of US$941m and earnings per share (EPS) of US$2.42 in 2022. 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 Scorpio Tankers

With these upgrades, we're not surprised to see that the analysts have lifted their price target 6.7% to US$40.12 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Scorpio Tankers at US$54.00 per share, while the most bearish prices it at US$10.50. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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. The analysts are definitely expecting Scorpio Tankers' growth to accelerate, with the forecast 88% annualised growth to the end of 2022 ranking favourably alongside historical growth of 7.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 4.3% per year. So it's clear with the acceleration in growth, Scorpio Tankers is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Scorpio Tankers could be worth investigating further.

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 Scorpio Tankers 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.