The analysts covering Ithaca Energy plc (LON:ITH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the six analysts covering Ithaca Energy, is for revenues of US$1.7b in 2024, which would reflect a disturbing 26% reduction in Ithaca Energy's sales over the past 12 months. Per-share earnings are expected to increase 7.2% to US$0.23. Before this latest update, the analysts had been forecasting revenues of US$2.1b and earnings per share (EPS) of US$0.42 in 2024. Indeed, we can see that the analysts are a lot more bearish about Ithaca Energy's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Ithaca Energy  earnings-and-revenue-growth

The consensus price target fell 11% to US$2.03, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. There are some variant perceptions on Ithaca Energy, with the most bullish analyst valuing it at US$2.65 and the most bearish at US$1.76 per share. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 26% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 36% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 1.6% per year. The forecasts do look bearish for Ithaca Energy, since they're expecting it to shrink faster than the industry.



The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Ithaca Energy. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Ithaca Energy revenue is expected to perform worse than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Ithaca Energy going out to 2026, and you can see them free on our platform here.

Of course, seeing company management  invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.