PHX Minerals Inc. (NYSE:PHX) Analysts Just Slashed This Year's Revenue Estimates By 12%
The latest analyst coverage could presage a bad day for PHX Minerals Inc. (NYSE:PHX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, the dual analysts covering PHX Minerals provided consensus estimates of US$55m revenue in 2023, which would reflect an uncomfortable 17% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$63m in 2023. The consensus view seems to have become more pessimistic on PHX Minerals, noting the measurable cut to revenue estimates in this update.
See our latest analysis for PHX Minerals
We'd point out that there was no major changes to their price target of US$5.53, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. The most optimistic PHX Minerals analyst has a price target of US$7.00 per share, while the most pessimistic values it at US$4.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await PHX Minerals shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that PHX Minerals' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 17% to the end of 2023. This tops off a historical decline of 0.6% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to decline 6.2% annually. So it's pretty clear that PHX Minerals sales are expected to decline at a faster rate than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to shrink faster than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of PHX Minerals going forwards.
That said, the analysts might have good reason to be negative on PHX Minerals, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags we've identified.
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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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