Boston Private Financial Holdings, Inc. (NASDAQ:BPFH) shareholders are probably feeling a little disappointed, since its shares fell 2.2% to US$7.02 in the week after its latest first-quarter results. It looks like a pretty bad result, all things considered. Although revenues of US$79m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 94% to hit US$0.01 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Boston Private Financial Holdings after the latest results.
Taking into account the latest results, the consensus forecast from Boston Private Financial Holdings' five analysts is for revenues of US$325.5m in 2020, which would reflect an okay 5.0% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 46% to US$0.40 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$323.6m and earnings per share (EPS) of US$0.70 in 2020. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$8.63, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Boston Private Financial Holdings analyst has a price target of US$12.25 per share, while the most pessimistic values it at US$6.50. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Boston Private Financial Holdings'growth to accelerate, with the forecast 5.0% growth ranking favourably alongside historical growth of 0.6% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Boston Private Financial Holdings is expected to grow much faster than its 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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Boston Private Financial Holdings going out to 2021, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Boston Private Financial Holdings (1 is potentially serious!) that we have uncovered.
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