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RWE Aktiengesellschaft (ETR:RWE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.
After the upgrade, the consensus from RWE's 14 analysts is for revenues of €37b in 2023, which would reflect a noticeable 4.1% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to reduce 4.9% to €3.47 in the same period. Before this latest update, the analysts had been forecasting revenues of €33b and earnings per share (EPS) of €3.49 in 2023. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.
Check out our latest analysis for RWE
It may not be a surprise to see that the analysts have reconfirmed their price target of €51.23, implying that the uplift in sales is not expected to greatly contribute to RWE's valuation in the near term. 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. The most optimistic RWE analyst has a price target of €56.00 per share, while the most pessimistic values it at €45.90. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the RWE's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.1% by the end of 2023. This indicates a significant reduction from annual growth of 24% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 2.0% per year. The forecasts do look bearish for RWE, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Notably, analysts also upgraded their revenue estimates, with sales performing well although RWE's revenue growth is expected to trail that of the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at RWE.