Celebrations may be in order for Frontline Ltd. (NYSE:FRO) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
Following the latest upgrade, the current consensus, from the six analysts covering Frontline, is for revenues of US$720m in 2022, which would reflect a stressful 20% reduction in Frontline’s sales over the past 12 months. Before the latest update, the analysts were foreseeing US$627m of revenue in 2022. It looks like there’s been a clear increase in optimism around Frontline, given the solid increase in revenue forecasts.
Check out our latest analysis for Frontline
The consensus price target rose 5.4% to US$11.63, with the analysts clearly more optimistic about Frontline’s prospects following this update. 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. There are some variant perceptions on Frontline, with the most bullish analyst valuing it at US$13.67 and the most bearish at US$7.00 per share. 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.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 37% by the end of 2022. This indicates a significant reduction from annual growth of 7.3% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 6.6% per year. So it’s pretty clear that Frontline’s revenues are expected to shrink faster than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Frontline this year. The analysts also expect revenues to shrink faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year’s forecasts, it might be time to take another look at Frontline.
These earnings upgrades look like a sterling endorsement, but before diving in – you should know that we’ve spotted 2 potential concern with Frontline, including dilutive stock issuance over the past year. You can learn more, and discover the 1 other concern we’ve identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.
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