Growth Investors: Industry Analysts Just Upgraded Their Valero Energy Corporation (NYSE:VLO) Revenue Forecasts By 10%

Valero Energy Corporation (NYSE:VLO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Valero Energy will make substantially more sales than they'd previously expected.

After the upgrade, the consensus from Valero Energy's 13 analysts is for revenues of US$155b in 2023, which would reflect a definite 12% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$140b of revenue in 2023. It looks like there's been a clear increase in optimism around Valero Energy, given the nice gain to revenue forecasts.

See our latest analysis for Valero Energy

There was no particular change to the consensus price target of US$155, with Valero Energy's latest outlook seemingly not enough to result in a change of 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 Valero Energy, with the most bullish analyst valuing it at US$174 and the most bearish at US$117 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 12% by the end of 2023. This indicates a significant reduction from annual growth of 7.7% 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 5.6% annually for the foreseeable future. The forecasts do look bearish for Valero Energy, since they're expecting it to shrink faster than the industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Valero Energy this year. The analysts also expect revenues to shrink faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Valero Energy.

Want more information? At least one of Valero Energy's 13 analysts has provided estimates out to 2025, which can be seen for free on our platform here.

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.