Yahoo Finance Shorn Like A Sheep: Analysts Just Shaved Their ConocoPhillips (NYSE:COP) Forecasts Dramatically
Market forces rained on the parade of ConocoPhillips (NYSE:COP) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. At US$39.14, shares are up 8.5% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.
Following the latest downgrade, the current consensus, from the 17 analysts covering ConocoPhillips, is for revenues of US$16b in 2020, which would reflect a sizeable 51% reduction in ConocoPhillips' sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$3.63 per share in 2020. However, before this estimates update, the consensus had been expecting revenues of US$20b and US$1.31 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for ConocoPhillips
Analysts lifted their price target 6.1% to US$47.15, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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. There are some variant perceptions on ConocoPhillips, with the most bullish analyst valuing it at US$68.00 and the most bearish at US$33.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue shrink 0.3% per year. So it's pretty clear that ConocoPhillips sales are expected to decline at a faster rate than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at ConocoPhillips. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that ConocoPhillips revenue is expected to perform worse than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of ConocoPhillips.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with ConocoPhillips' business, like a weak balance sheet. For more information, you can click here to discover this and the 4 other risks we've identified.
You can also see our analysis of ConocoPhillips' Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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