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Growth Investors: Industry Analysts Just Upgraded Their SVB Financial Group (NASDAQ:SIVB) Revenue Forecasts By 14%

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Simply Wall St
·4 min read
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SVB Financial Group (NASDAQ:SIVB) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The stock price has risen 4.1% to US$480 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the current consensus from SVB Financial Group's 17 analysts is for revenues of US$4.0b in 2021 which - if met - would reflect a reasonable 7.0% increase on its sales over the past 12 months. Statutory earnings per share are supposed to fall 18% to US$18.83 in the same period. Prior to this update, the analysts had been forecasting revenues of US$3.6b and earnings per share (EPS) of US$17.20 in 2021. Sentiment certainly seems to have improved in recent times, with a nice increase in revenue and a slight bump in earnings per share estimates.

See our latest analysis for SVB Financial Group

earnings-and-revenue-growth
earnings-and-revenue-growth

It will come as no surprise to learn that the analysts have increased their price target for SVB Financial Group 13% to US$481 on the back of these upgrades. 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 SVB Financial Group at US$550 per share, while the most bearish prices it at US$325. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await SVB Financial Group shareholders.

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. It's pretty clear that there is an expectation that SVB Financial Group's revenue growth will slow down substantially, with revenues next year expected to grow 7.0%, compared to a historical growth rate of 21% 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) 6.0% next year. So it's pretty clear that, while SVB Financial Group's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue forecasts, although the latest estimates suggest that SVB Financial Group will grow in line with the overall market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at SVB Financial Group.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for SVB Financial Group going out to 2022, and you can see them 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.