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Need To Know: Analysts Are Much More Bullish On NRG Energy, Inc. (NYSE:NRG) Revenues

NRG Energy, Inc. (NYSE:NRG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. The stock price has risen 7.7% to US$33.19 over the past week, suggesting investors are becoming more optimistic. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

After the upgrade, the consensus from NRG Energy's three analysts is for revenues of US$18b in 2023, which would reflect a stressful 42% decline in sales compared to the last year of performance. Per-share earnings are expected to jump 65% to US$8.67. Prior to this update, the analysts had been forecasting revenues of US$13b and earnings per share (EPS) of US$8.53 in 2023. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for NRG Energy

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Even though revenue forecasts increased, there was no change to the consensus price target of US$39.67, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values NRG Energy at US$52.00 per share, while the most bearish prices it at US$30.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 42% by the end of 2023. This indicates a significant reduction from annual growth of 31% 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 3.7% annually for the foreseeable future. It's pretty clear that NRG Energy's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at NRG Energy.

Analysts are definitely bullish on NRG Energy, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including its declining profit margins. For more information, you can click through to our platform to learn more about this and the 2 other risks we've identified .

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading 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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