Keyera Corp. (TSE:KEY) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Investor sentiment seems to be improving too, with the share price up 6.7% to CA$33.95 over the past 7 days. Could this big upgrade push the stock even higher?
Following the upgrade, the current consensus from Keyera's five analysts is for revenues of CA$6.0b in 2022 which - if met - would reflect a credible 5.8% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 26% to CA$2.01. Previously, the analysts had been modelling revenues of CA$5.4b and earnings per share (EPS) of CA$1.66 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of CA$36.38, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Keyera analyst has a price target of CA$40.50 per share, while the most pessimistic values it at CA$30.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Keyera's past performance and to peers in the same industry. It's clear from the latest estimates that Keyera's rate of growth is expected to accelerate meaningfully, with the forecast 7.8% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Keyera to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Keyera.
Analysts are definitely bullish on Keyera, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including a weak balance sheet. You can learn more, and discover the 1 other warning sign we've identified, for free on our platform here.
We also provide an overview of the Keyera Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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.