Shareholders of Callon Petroleum Company (NYSE:CPE) will be pleased this week, given that the stock price is up 12% to US$25.57 following its latest yearly results. It was a pretty bad result overall; while revenues were in line with expectations at US$1.0b, statutory losses exploded to US$63.79 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Callon Petroleum

Taking into account the latest results, the current consensus from Callon Petroleum's seven analysts is for revenues of US$1.24b in 2021, which would reflect a solid 20% increase on its sales over the past 12 months. Earnings are expected to improve, with Callon Petroleum forecast to report a statutory profit of US$5.54 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.12b and earnings per share (EPS) of US$3.10 in 2021. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 13% to US$18.07per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Callon Petroleum, with the most bullish analyst valuing it at US$31.00 and the most bearish at US$7.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. It's pretty clear that there is an expectation that Callon Petroleum's revenue growth will slow down substantially, with revenues next year expected to grow 20%, compared to a historical growth rate of 36% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% next year. Even after the forecast slowdown in growth, it seems obvious that Callon Petroleum is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Callon Petroleum following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Callon Petroleum going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Callon Petroleum that you should be aware of.

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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