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Market forces rained on the parade of Geo Energy Resources Limited (SGX:RE4) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the single analyst covering Geo Energy Resources is now predicting revenues of US$573m in 2025. If met, this would reflect a substantial 43% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 140% to US$0.063. Previously, the analyst had been modelling revenues of US$860m and earnings per share (EPS) of US$0.13 in 2025. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.
View our latest analysis for Geo Energy Resources
It'll come as no surprise then, to learn that the analyst has cut their price target 9.1% to US$0.48.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analyst is definitely expecting Geo Energy Resources' growth to accelerate, with the forecast 43% annualised growth to the end of 2025 ranking favourably alongside historical growth of 9.6% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 0.7% per year. So it's clear with the acceleration in growth, Geo Energy Resources is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Geo Energy Resources.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Geo Energy Resources going out as far as 2027, 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 backed by insiders.
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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.