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Celebrations may be in order for First Internet Bancorp (NASDAQ:INBK) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the upgrade, the current consensus from First Internet Bancorp's five analysts is for revenues of US$99m in 2021 which - if met - would reflect a modest 7.4% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$89m of revenue in 2021. The consensus has definitely become more optimistic, showing a nice increase in revenue forecasts.
We'd point out that there was no major changes to their price target of US$42.70, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic First Internet Bancorp analyst has a price target of US$46.50 per share, while the most pessimistic values it at US$37.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the First Internet Bancorp's past performance and to peers in the same industry. We would highlight that First Internet Bancorp's revenue growth is expected to slow, with the forecast 7.4% annualised growth rate until the end of 2021 being well below the historical 15% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.5% annually. Factoring in the forecast slowdown in growth, it looks like First Internet Bancorp is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for First Internet Bancorp this year. They're also forecasting for revenues to grow at about the same rate as companies in the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at First Internet Bancorp.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on First Internet Bancorp that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology 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.
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.
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