The analysts covering OPAL Fuels Inc. (NASDAQ:OPAL) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
After the downgrade, the six analysts covering OPAL Fuels are now predicting revenues of US$319m in 2024. If met, this would reflect a sizeable 24% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$378m of revenue in 2024. The consensus view seems to have become more pessimistic on OPAL Fuels, noting the substantial drop in revenue estimates in this update.
We'd point out that there was no major changes to their price target of US$10.51, 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. We can infer from the latest estimates that forecasts expect a continuation of OPAL Fuels'historical trends, as the 24% annualised revenue growth to the end of 2024 is roughly in line with the 23% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 1.7% per year. So although OPAL Fuels is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on OPAL Fuels after today.
Of course, this isn't the full story. At least one of OPAL Fuels' six analysts has provided estimates out to 2026, which can be seen for 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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