Yahoo Finance Chesapeake Energy Corporation (NASDAQ:CHK) Analysts Are More Bearish Than They Used To Be
One thing we could say about the analysts on Chesapeake Energy Corporation (NASDAQ:CHK) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After the downgrade, the consensus from Chesapeake Energy's ten analysts is for revenues of US$5.2b in 2023, which would reflect a disturbing 63% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to plummet 80% to US$7.17 in the same period. Prior to this update, the analysts had been forecasting revenues of US$5.3b and earnings per share (EPS) of US$5.91 in 2023. Although the revenue estimates have not really changed, we can see there's been a very substantial lift in earnings per share expectations, suggesting that the analystshave become more bullish after the latest consensus.
View our latest analysis for Chesapeake Energy
There's been no major changes to the consensus price target of US$121, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Chesapeake Energy at US$155 per share, while the most bearish prices it at US$90.00. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 63% by the end of 2023. This indicates a significant reduction from annual growth of 0.8% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 6.3% per year. So it's pretty clear that Chesapeake Energy's revenues are expected to shrink faster than 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. They also made no changes to their revenue estimates, implying there isn't much expectation of a major impact to the sales trajectory in the near term. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Chesapeake Energy.
That said, the analysts might have good reason to be negative on Chesapeake Energy, given its declining profit margins. Learn more, and discover the 3 other concerns 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.
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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.
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