Need To Know: Analysts Are Much More Bullish On Talos Energy Inc. (NYSE:TALO)

Celebrations may be in order for Talos Energy Inc. (NYSE:TALO) 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.

Following the upgrade, the current consensus from Talos Energy's five analysts is for revenues of US$1.8b in 2024 which - if met - would reflect a huge 30% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 96% to US$1.65. Previously, the analysts had been modelling revenues of US$1.6b and earnings per share (EPS) of US$1.35 in 2024. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Talos Energy

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$19.81, suggesting that the forecast performance does not have a long term impact on the company's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Talos Energy's past performance and to peers in the same industry. It's clear from the latest estimates that Talos Energy's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 16% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 0.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Talos Energy is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Talos Energy could be a good candidate for more research.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential flags with Talos Energy, including its declining profit margins. For more information, you can click through to our platform to learn more about this and the 2 other flags we've identified .

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.