Yahoo Finance Analyst Forecasts For Laredo Petroleum, Inc. (NYSE:LPI) Are Surging Higher
Laredo Petroleum, Inc. (NYSE:LPI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.
After the upgrade, the consensus from Laredo Petroleum's eight analysts is for revenues of US$698m in 2020, which would reflect an uneasy 16% decline in sales compared to the last year of performance. Losses are expected to turn into profits real soon, with the analysts forecasting US$1.18 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of US$652m and earnings per share (EPS) of US$0.34 in 2020. So it seems there's been a definite increase in optimism about Laredo Petroleum's future following the latest consensus numbers, with a great increase in the earnings per share forecasts in particular.
Check out our latest analysis for Laredo Petroleum
As a result, it might be a surprise to see that the analysts have cut their price target 8.5% to US$0.81, which could suggest the forecast improvement in performance is not expected to last. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Laredo Petroleum, with the most bullish analyst valuing it at US$2.00 and the most bearish at US$0.30 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. We would highlight that sales are expected to reverse, with the forecast 16% revenue decline a notable change from historical growth of 9.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Laredo Petroleum is expected to lag the wider industry.
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, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Laredo Petroleum could be one for the watch list.
Analysts are clearly in love with Laredo Petroleum at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as dilutive stock issuance over the past year. You can learn more, and discover the 2 other flags we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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