Shareholders in Indonesia Energy Corporation Limited (NYSEMKT:INDO) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.
After this upgrade, Indonesia Energy's three analysts are now forecasting revenues of US$8.0m in 2020. This would be a huge 90% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 78% to US$0.06. However, before this estimates update, the consensus had been expecting revenues of US$6.2m and US$0.30 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
The consensus price target rose 7.1% to US$10.00, with the analysts encouraged by the higher revenue and lower forecast losses for this year. 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. The most optimistic Indonesia Energy analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$8.00. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Indonesia Energy's growth to accelerate, with the forecast 90% growth ranking favourably alongside historical growth of 15% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.6% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Indonesia Energy to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Indonesia Energy is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Indonesia Energy.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Indonesia Energy analysts - 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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. 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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