As you might know, Deutsche Bank Aktiengesellschaft (ETR:DBK) just kicked off its latest quarterly results with some very strong numbers. Results overall were solid, with revenues arriving 8.6% better than analyst forecasts at €6.2b. Higher revenues also resulted in substantially lower statutory losses which, at €0.01 per share, were 8.6% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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, Deutsche Bank's 16 analysts currently expect revenues in 2020 to be €21.6b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 64% to €1.00. Before this earnings announcement, the analysts had been modelling revenues of €21.3b and losses of €0.96 per share in 2020. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although sales forecasts held steady, the consensus also made a to its losses per share forecasts.
As a result, there was no major change to the consensus price target of €5.60, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Deutsche Bank at €8.00 per share, while the most bearish prices it at €3.00. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would also point out that the forecast 1.5% revenue decline is better than the historical trend, which saw revenues shrink -8.6% annually over the past five years
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Deutsche Bank. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Deutsche Bank going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Deutsche Bank you should know about.
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