Shareholders in Comstock Resources, Inc. (NYSE:CRK) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the upgrade, the latest consensus from Comstock Resources' seven analysts is for revenues of US$2.3b in 2022, which would reflect a substantial 23% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$3.27 in per-share earnings. Before this latest update, the analysts had been forecasting revenues of US$2.0b and earnings per share (EPS) of US$2.61 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
See our latest analysis for Comstock Resources
It will come as no surprise to learn that the analysts have increased their price target for Comstock Resources 30% to US$19.78 on the back of these upgrades. 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 Comstock Resources, with the most bullish analyst valuing it at US$22.00 and the most bearish at US$17.00 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
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. It's pretty clear that there is an expectation that Comstock Resources' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 23% growth on an annualised basis. This is compared to a historical growth rate of 41% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.2% per year. So it's pretty clear that, while Comstock Resources' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Comstock Resources.