Revenue Downgrade: Here’s What Analysts Forecast For ARC Resources Ltd. (TSE:ARX)

The latest analyst coverage could presage a bad day for ARC Resources Ltd. (TSE:ARX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook – perhaps a sign that investors should temper their expectations as well. At CA$25.90, shares are up 4.1% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, ARC Resources’ four analysts are now forecasting revenues of CA$5.6b in 2025. This would be a satisfactory 3.0% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 53% to CA$2.92. Previously, the analysts had been modelling revenues of CA$6.2b and earnings per share (EPS) of CA$2.95 in 2025. So there’s been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.

View our latest analysis for ARC Resources

The consensus has reconfirmed its price target of CA$33.00, showing that the analysts don’t expect weaker sales expectationsthis year to have a material impact on ARC Resources’ market value.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s pretty clear that there is an expectation that ARC Resources’ revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.0% growth on an annualised basis. This is compared to a historical growth rate of 26% 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) 1.9% per year. Even after the forecast slowdown in growth, it seems obvious that ARC Resources is also expected to grow faster than the wider industry.

The most obvious conclusion from this consensus update is that there’s been no major change in the business’ prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to this year’s forecasts, we’d be feeling a little more wary of ARC Resources going forwards.

Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple ARC Resources analysts – going out to 2027, and you can see them free on our platform here.