Yahoo Finance Analysts Just Shipped A Meaningful Upgrade To Their BP p.l.c. (LON:BP.) Estimates
Celebrations may be in order for BP p.l.c. (LON:BP.) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
After the upgrade, the 21 analysts covering BP are now predicting revenues of US$245b in 2022. If met, this would reflect a sizeable 43% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$0.27 per share this year. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$208b and losses of US$0.17 per share in 2022. So we can see that this has sparked a pretty clear upgrade to expectations, with higher revenues anticipated to lead to profit sooner than previously forecast.
Check out our latest analysis for BP
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$6.11, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on BP, with the most bullish analyst valuing it at US$6.91 and the most bearish at US$3.88 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that BP is forecast to grow faster in the future than it has in the past, with revenues expected to display 105% annualised growth until the end of 2022. If achieved, this would be a much better result than the 15% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to decline 4.5% per year. So it's pretty clear that BP is expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that there is now an expectation for BP to become profitable this year, compared to previous expectations of a loss. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. 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 BP.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple BP analysts - 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.
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