Yahoo Finance Analysts Have Lowered Expectations For Patterson-UTI Energy, Inc. (NASDAQ:PTEN) After Its Latest Results
The investors in Patterson-UTI Energy, Inc.'s (NASDAQ:PTEN) will be rubbing their hands together with glee today, after the share price leapt 25% to US$2.59 in the week following its quarterly results. Revenues were in line with expectations, at US$446m, while statutory losses ballooned to US$2.28 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Patterson-UTI Energy
Taking into account the latest results, the 21 analysts covering Patterson-UTI Energy provided consensus estimates of US$1.04b revenue in 2020, which would reflect a painful 53% decline on its sales over the past 12 months. Losses are expected to hold steady at around US$4.19. Before this latest report, the consensus had been expecting revenues of US$1.31b and US$2.28 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
There was no major change to the consensus price target of US$2.98, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Patterson-UTI Energy analyst has a price target of US$7.00 per share, while the most pessimistic values it at US$1.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Patterson-UTI Energy's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 53%, a significant reduction from annual growth of 8.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.5% annually for the foreseeable future. The forecasts do look bearish for Patterson-UTI Energy, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Patterson-UTI Energy. Unfortunately they also downgraded their revenue estimates, and our analysts estimates suggest that Patterson-UTI Energy is still expected to perform worse than the wider industry. The consensus price target held steady at US$2.98, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Patterson-UTI Energy going out to 2024, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 3 warning signs for Patterson-UTI Energy you should be aware of, and 1 of them can't be ignored.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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