Civitas Resources, Inc. (NYSE:CIVI) shareholders are probably feeling a little disappointed, since its shares fell 3.3% to US$27.37 in the week after its latest first-quarter results. It looks like a credible result overall - although revenues of US$1.2b were in line with what the analysts predicted, Civitas Resources surprised by delivering a statutory profit of US$1.99 per share, a notable 18% above expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus, from the nine analysts covering Civitas Resources, is for revenues of US$4.59b in 2025. This implies an uneasy 9.5% reduction in Civitas Resources' revenue over the past 12 months. Statutory earnings per share are forecast to dive 36% to US$5.83 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$4.76b and earnings per share (EPS) of US$6.23 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
See our latest analysis for Civitas Resources
Despite the cuts to forecast earnings, there was no real change to the US$45.00 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Civitas Resources at US$62.00 per share, while the most bearish prices it at US$27.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 12% by the end of 2025. This indicates a significant reduction from annual growth of 47% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Civitas Resources is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Civitas Resources. Long-term earnings power is much more important than next year's profits. We have forecasts for Civitas Resources going out to 2027, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 4 warning signs for Civitas Resources (1 is concerning!) that you need to be mindful of.
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