Yahoo Finance Analysts Are Much More Bearish On Baytex Energy Corp. (TSE:BTE) Than They Used To Be
Market forces rained on the parade of Baytex Energy Corp. (TSE:BTE) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After the downgrade, the consensus from Baytex Energy's three analysts is for revenues of CA$734m in 2020, which would reflect a substantial 47% decline in sales compared to the last year of performance. Per-share losses are expected to creep up to CA$4.79. Yet prior to the latest estimates, the analysts had been forecasting revenues of CA$1.3b and losses of CA$0.39 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
Check out our latest analysis for Baytex Energy
The consensus price target was broadly unchanged at CA$0.54, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Baytex Energy analyst has a price target of CA$0.75 per share, while the most pessimistic values it at CA$0.30. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We would highlight that sales are expected to reverse, with the forecast 47% revenue decline a notable change from historical growth of 7.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.5% next year. It's pretty clear that Baytex Energy's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Baytex Energy.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Baytex Energy analysts - going out to 2021, 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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