Need To Know: Analysts Are Much More Bullish On Empire State Realty Trust, Inc. (NYSE:ESRT)
Empire State Realty Trust, Inc. (NYSE:ESRT) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The stock price has risen 7.2% to US$8.09 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.
After the upgrade, the three analysts covering Empire State Realty Trust are now predicting revenues of US$721m in 2022. If met, this would reflect a decent 9.9% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 81% to US$0.089. Prior to this update, the analysts had been forecasting revenues of US$580m and earnings per share (EPS) of US$0.049 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Check out our latest analysis for Empire State Realty Trust
As a result, it might be a surprise to see that the analysts have cut their price target 9.1% to US$8.54, which could suggest the forecast improvement in performance is not expected to last. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Empire State Realty Trust at US$10.50 per share, while the most bearish prices it at US$5.50. 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 Empire State Realty Trust 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. For example, we noticed that Empire State Realty Trust's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 21% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 3.3% a year 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 7.1% annually. Not only are Empire State Realty Trust's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at Empire State Realty Trust.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Empire State Realty Trust analysts - going out to 2023, 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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