Celebrations may be in order for Northern Oil and Gas, Inc. (NYSEMKT:NOG) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Northern Oil and Gas will make substantially more sales than they'd previously expected.
After this upgrade, Northern Oil and Gas' seven analysts are now forecasting revenues of US$640m in 2021. This would be a sizeable 84% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$2.37 in per-share earnings. Previously, the analysts had been modelling revenues of US$516m and earnings per share (EPS) of US$2.27 in 2021. Sentiment certainly seems to have improved in recent times, with a chunky increase in revenue and a slight bump in earnings per share estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 17% to US$16.56 per share. 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. The most optimistic Northern Oil and Gas analyst has a price target of US$23.00 per share, while the most pessimistic values it at US$14.00. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Northern Oil and Gas' growth to accelerate, with the forecast 84% growth ranking favourably alongside historical growth of 27% per annum 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 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Northern Oil and Gas to grow faster than the wider 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Northern Oil and Gas.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential concerns with Northern Oil and Gas, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other concerns 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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