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Just In: One Analyst Has Become A Lot More Bullish On Ambac Financial Group, Inc.'s (NYSE:AMBC) Earnings

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·3 min read
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Ambac Financial Group, Inc. (NYSE:AMBC) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the sole analyst covering Ambac Financial Group is now predicting revenues of US$213m in 2021. If met, this would reflect a major 28% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 72% to US$2.67. However, before this estimates update, the consensus had been expecting revenues of US$193m and US$3.17 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analyst administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

Check out our latest analysis for Ambac Financial Group

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earnings-and-revenue-growth

The consensus price target rose 21% to US$17.00, with the analyst encouraged by the higher revenue and lower forecast losses for this year.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Ambac Financial Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 28% annualised growth until the end of 2021. If achieved, this would be a much better result than the 19% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.2% annually. Not only are Ambac Financial Group's revenues expected to improve, it seems that the analyst is also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analyst reduced their loss per share estimates for this year, reflecting increased optimism around Ambac Financial Group's prospects. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Ambac Financial Group could be worth investigating further.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Ambac Financial Group going out as far as 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.