Shareholders in Centennial Resource Development, Inc. (NASDAQ:CDEV) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investor sentiment seems to be improving too, with the share price up 10.0% to US$9.37 over the past 7 days. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
After the upgrade, the five analysts covering Centennial Resource Development are now predicting revenues of US$2.0b in 2022. If met, this would reflect a sizeable 70% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$1.4b of revenue in 2022. It looks like there's been a clear increase in optimism around Centennial Resource Development, given the very substantial lift in revenue forecasts.
See our latest analysis for Centennial Resource Development
There was no particular change to the consensus price target of US$10.80, with Centennial Resource Development's latest outlook seemingly not enough to result in a change of valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Centennial Resource Development at US$14.00 per share, while the most bearish prices 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.
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. It's clear from the latest estimates that Centennial Resource Development's rate of growth is expected to accelerate meaningfully, with the forecast 103% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 16% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 4.3% annually. So it's clear with the acceleration in growth, Centennial Resource Development is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Centennial Resource Development this year. The analysts also expect revenues to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Centennial Resource Development.