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Shareholders in W&T Offshore, Inc. (NYSE:WTI) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. W&T Offshore has also found favour with investors, with the stock up a notable 17% to US$5.73 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the most recent consensus for W&T Offshore from its solo analyst is for revenues of US$946m in 2022 which, if met, would be a huge 54% increase on its sales over the past 12 months. Losses are expected to turn into profits real soon, with the analyst forecasting US$2.03 in per-share earnings. Prior to this update, the analyst had been forecasting revenues of US$759m and earnings per share (EPS) of US$1.66 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
See our latest analysis for W&T Offshore
Although the analyst has upgraded their earnings estimates, there was no change to the consensus price target of US$8.10, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values W&T Offshore at US$9.70 per share, while the most bearish prices it at US$6.50. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. For example, we noticed that W&T Offshore's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 78% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 0.9% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to decline 1.1% per year. So it's pretty clear that W&T Offshore is expected to grow faster than the wider industry.