Yahoo Finance Analyst Forecasts Just Became More Bearish On Cenovus Energy Inc. (TSE:CVE)
The latest analyst coverage could presage a bad day for Cenovus Energy Inc. (TSE:CVE), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the downgrade, the current consensus from Cenovus Energy's five analysts is for revenues of CA$68b in 2022 which - if met - would reflect a decent 9.7% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 92% to CA$4.14. Previously, the analysts had been modelling revenues of CA$76b and earnings per share (EPS) of CA$4.50 in 2022. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a minor downgrade to earnings per share numbers as well.
View our latest analysis for Cenovus Energy
Analysts made no major changes to their price target of CA$33.00, suggesting the downgrades are not expected to have a long-term impact on Cenovus Energy's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Cenovus Energy at CA$38.00 per share, while the most bearish prices it at CA$28.00. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Cenovus Energy'shistorical trends, as the 20% annualised revenue growth to the end of 2022 is roughly in line with the 24% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 0.2% per year. So it's pretty clear that Cenovus Energy is forecast to grow substantially faster than its industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Cenovus Energy. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Cenovus Energy going forwards.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Cenovus Energy going out to 2024, and you can see them 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 downgrading their estimates. So you may also wish to search this free list of stocks 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.
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