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Some Analysts Just Cut Their Imperial Oil Limited (TSE:IMO) Estimates

One thing we could say about the analysts on Imperial Oil Limited (TSE:IMO) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the current consensus from Imperial Oil's five analysts is for revenues of CA$54b in 2022 which - if met - would reflect a sizeable 25% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$80b in 2022. It looks like forecasts have become a fair bit less optimistic on Imperial Oil, given the pretty serious reduction to revenue estimates.

View our latest analysis for Imperial Oil

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earnings-and-revenue-growth

There was no particular change to the consensus price target of CA$70.58, with Imperial Oil's latest outlook seemingly not enough to result in a change of 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. There are some variant perceptions on Imperial Oil, with the most bullish analyst valuing it at CA$81.00 and the most bearish at CA$56.00 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.

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Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Imperial Oil's rate of growth is expected to accelerate meaningfully, with the forecast 35% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 2.6% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 0.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Imperial Oil to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow faster than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Imperial Oil after today.

There might be good reason for analyst bearishness towards Imperial Oil, like recent substantial insider selling. Learn more, and discover the 1 other warning sign 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.