Yahoo Finance What You Need To Know About The Essential Utilities, Inc. (NYSE:WTRG) Analyst Downgrade Today
The latest analyst coverage could presage a bad day for Essential Utilities, Inc. (NYSE:WTRG), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 5.0% to US$38.30 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
After the downgrade, the six analysts covering Essential Utilities are now predicting revenues of US$2.1b in 2024. If met, this would reflect a decent 8.3% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$2.4b of revenue in 2024. The consensus view seems to have become more pessimistic on Essential Utilities, noting the measurable cut to revenue estimates in this update.
See our latest analysis for Essential Utilities
We'd point out that there was no major changes to their price target of US$44.00, suggesting the latest estimates were not enough to shift their view on the value of the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Essential Utilities' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.4% per year. Even after the forecast slowdown in growth, it seems obvious that Essential Utilities is also expected to grow faster than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Essential Utilities this year. They're also forecasting more rapid revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Essential Utilities after today.
There might be good reason for analyst bearishness towards Essential Utilities, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other concerns we've identified.
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.
