Celebrations may be in order for Northern Oil and Gas, Inc. (NYSE:NOG) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Northern Oil and Gas will make substantially more sales than they’d previously expected.
After this upgrade, Northern Oil and Gas’ five analysts are now forecasting revenues of US$1.8b in 2022. This would be a huge 22% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$1.6b of revenue in 2022. The consensus has definitely become more optimistic, showing a solid increase in revenue forecasts.
We’d point out that there was no major changes to their price target of US$45.73, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Northern Oil and Gas analyst has a price target of US$69.00 per share, while the most pessimistic values it at US$30.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s clear from the latest estimates that Northern Oil and Gas’ rate of growth is expected to accelerate meaningfully, with the forecast 49% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 31% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 6.2% per year. It seems obvious that as part of the brighter growth outlook, Northern Oil and Gas is expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. 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 Northern Oil and Gas.
Analysts are definitely bullish on Northern Oil and Gas, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 3 other concerns we’ve identified .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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