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Need To Know: Analysts Are Much More Bullish On Capital Power Corporation (TSE:CPX) Revenues

Shareholders in Capital Power Corporation (TSE:CPX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. The stock price has risen 4.0% to CA$45.15 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?

After the upgrade, the consensus from Capital Power's nine analysts is for revenues of CA$3.0b in 2023, which would reflect an uncomfortable 14% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of CA$2.5b in 2023. It looks like there's been a clear increase in optimism around Capital Power, given the nice increase in revenue forecasts.

See our latest analysis for Capital Power

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earnings-and-revenue-growth

We'd point out that there was no major changes to their price target of CA$51.38, 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 Capital Power, with the most bullish analyst valuing it at CA$57.00 and the most bearish at CA$48.00 per share. This is a very narrow spread of estimates, implying either that Capital Power is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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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. We would highlight that sales are expected to reverse, with a forecast 18% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Capital Power is expected to lag the wider 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 anticipating slower revenue growth than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Capital Power.

Still got questions? At least one of Capital Power's nine analysts has provided estimates out to 2025, which can be seen for free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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.

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