Northern Oil and Gas, Inc. (NYSE:NOG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investor sentiment seems to be improving too, with the share price up 9.6% to US$31.37 over the past 7 days. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the current consensus from Northern Oil and Gas' six analysts is for revenues of US$1.5b in 2022 which - if met - would reflect a credible 3.3% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 70% to US$4.19. Previously, the analysts had been modelling revenues of US$1.3b and earnings per share (EPS) of US$2.57 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.

Check out our latest analysis for Northern Oil and Gas

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$44.91, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Northern Oil and Gas at US$63.00 per share, while the most bearish prices it at US$30.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Northern Oil and Gas' revenue growth is expected to slow, with the forecast 6.7% annualised growth rate until the end of 2022 being well below the historical 31% p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 6.0% per year. So it's clear that despite the slowdown in growth, Northern Oil and Gas is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Northern Oil and Gas could be a good candidate for more research.

Analysts are clearly in love with Northern Oil and Gas at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as a weak balance sheet. You can learn more, and discover the 4 other concerns we've identified, for free on our platform here.

We also provide an overview of the Northern Oil and Gas Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.