Imperial Oil Limited (TSE:IMO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.
After the upgrade, the four analysts covering Imperial Oil are now predicting revenues of CA$66b in 2022. If met, this would reflect a substantial 26% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$59b of revenue in 2022. The consensus has definitely become more optimistic, showing a solid increase in revenue forecasts.
We'd point out that there was no major changes to their price target of CA$74.76, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Imperial Oil, with the most bullish analyst valuing it at CA$94.00 and the most bearish at CA$58.00 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.
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. It's clear from the latest estimates that Imperial Oil's rate of growth is expected to accelerate meaningfully, with the forecast 60% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.04% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Imperial Oil is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Imperial Oil.
Still got questions? At least one of Imperial Oil's four analysts has provided estimates out to 2024, which can be seen 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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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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