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Today is shaping up negative for Gulfport Energy Corporation (NYSE:GPOR) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After the downgrade, the consensus from Gulfport Energy's three analysts is for revenues of US$876m in 2022, which would reflect a substantial 40% decline in sales compared to the last year of performance. After this downgrade, the company is anticipated to report a loss of US$12.51 in 2022, a sharp decline from a profit over the last year. Previously, the analysts had been modelling revenues of US$1.3b and earnings per share (EPS) of US$18.68 in 2022. There looks to have been a major change in sentiment regarding Gulfport Energy's prospects, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.
View our latest analysis for Gulfport Energy
There was no major change to the consensus price target of US$118, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Gulfport Energy at US$125 per share, while the most bearish prices it at US$111. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 50% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 4.2% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 1.1% per year. The forecasts do look bearish for Gulfport Energy, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Gulfport Energy to become unprofitable this year. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Gulfport Energy after the downgrade.