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Growth Investors: Industry Analysts Just Upgraded Their ConnectOne Bancorp, Inc. (NASDAQ:CNOB) Revenue Forecasts By 11%

Simply Wall St
·3 min read

Shareholders in ConnectOne Bancorp, Inc. (NASDAQ:CNOB) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that ConnectOne Bancorp will make substantially more sales than they'd previously expected.

After the upgrade, the three analysts covering ConnectOne Bancorp are now predicting revenues of US$249m in 2020. If met, this would reflect a substantial 34% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to be US$1.86, roughly flat on the last 12 months. Before this latest update, the analysts had been forecasting revenues of US$223m and earnings per share (EPS) of US$1.84 in 2020. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

See our latest analysis for ConnectOne Bancorp

NasdaqGS:CNOB Past and Future Earnings May 8th 2020
NasdaqGS:CNOB Past and Future Earnings May 8th 2020

Even though revenue forecasts increased, the consensus price target fell 8.1% to US$20.67, perhaps suggesting that the analysts have become more pessimistic about the lack of earnings growth. 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 ConnectOne Bancorp at US$22.50 per share, while the most bearish prices it at US$18.50. This is a very narrow spread of estimates, implying either that ConnectOne Bancorp is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that ConnectOne Bancorp's rate of growth is expected to accelerate meaningfully, with the forecast 34% revenue growth noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.6% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that ConnectOne Bancorp is expected to grow much faster than its industry.

The Bottom Line

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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of ConnectOne Bancorp's future valuation. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at ConnectOne Bancorp.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple ConnectOne Bancorp analysts - going out to 2021, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.