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Ithaca Energy plc (LON:ITH) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
After this upgrade, Ithaca Energy's seven analysts are now forecasting revenues of US$2.1b in 2024. This would be a meaningful 8.5% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to descend 15% to US$0.14 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.9b and earnings per share (EPS) of US$0.04 in 2024. So it seems there's been a definite increase in optimism about Ithaca Energy's future following the latest consensus numbers, with a massive increase in the earnings per share forecasts in particular.
View our latest analysis for Ithaca Energy
Despite these upgrades, the analysts have not made any major changes to their price target of US$1.93, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Ithaca Energy, with the most bullish analyst valuing it at US$2.80 and the most bearish at US$1.47 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Ithaca Energy's revenue growth is expected to slow, with the forecast 18% annualised growth rate until the end of 2024 being well below the historical 28% p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 1.3% per year. So it's clear that despite the slowdown in growth, Ithaca Energy is still expected to grow meaningfully 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 this year, expecting improving business conditions. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better 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 Ithaca Energy could be a good candidate for more research.