Advertisement
Canada markets close in 5 hours 25 minutes
  • S&P/TSX

    21,720.77
    -240.78 (-1.10%)
     
  • S&P 500

    5,412.63
    -8.40 (-0.15%)
     
  • DOW

    38,410.62
    -301.59 (-0.78%)
     
  • CAD/USD

    0.7269
    -0.0021 (-0.28%)
     
  • CRUDE OIL

    78.70
    +0.20 (+0.25%)
     
  • Bitcoin CAD

    92,625.34
    -3,433.82 (-3.57%)
     
  • CMC Crypto 200

    1,421.95
    +9.00 (+0.64%)
     
  • GOLD FUTURES

    2,326.20
    -28.60 (-1.21%)
     
  • RUSSELL 2000

    2,038.67
    -18.43 (-0.90%)
     
  • 10-Yr Bond

    4.2730
    -0.0220 (-0.51%)
     
  • NASDAQ

    17,650.04
    +41.61 (+0.24%)
     
  • VOLATILITY

    12.24
    +0.20 (+1.66%)
     
  • FTSE

    8,157.39
    -58.09 (-0.71%)
     
  • NIKKEI 225

    38,720.47
    -156.24 (-0.40%)
     
  • CAD/EUR

    0.6746
    +0.0007 (+0.10%)
     

Time To Worry? Analysts Just Downgraded Their Birchcliff Energy Ltd. (TSE:BIR) Outlook

One thing we could say about the analysts on Birchcliff Energy Ltd. (TSE:BIR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 current consensus, from the three analysts covering Birchcliff Energy, is for revenues of CA$764m in 2023, which would reflect a disturbing 37% reduction in Birchcliff Energy's sales over the past 12 months. Statutory earnings per share are supposed to tumble 85% to CA$0.28 in the same period. Previously, the analysts had been modelling revenues of CA$906m and earnings per share (EPS) of CA$0.49 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

View our latest analysis for Birchcliff Energy

earnings-and-revenue-growth
earnings-and-revenue-growth

Analysts made no major changes to their price target of CA$10.10, suggesting the downgrades are not expected to have a long-term impact on Birchcliff Energy's valuation. 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 Birchcliff Energy, with the most bullish analyst valuing it at CA$16.00 and the most bearish at CA$7.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

ADVERTISEMENT

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 46% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 20% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.7% annually for the foreseeable future. It's pretty clear that Birchcliff Energy's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Birchcliff Energy going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Birchcliff Energy analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here