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PacWest Bancorp Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Simply Wall St
·4 mins read

PacWest Bancorp (NASDAQ:PACW) shareholders are probably feeling a little disappointed, since its shares fell 2.9% to US$18.57 in the week after its latest quarterly results. Results overall were not great, with earnings of US$0.38 per share falling drastically short of analyst expectations. Meanwhile revenues hit US$292m and were slightly better than forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for PacWest Bancorp

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earnings-and-revenue-growth

After the latest results, the eight analysts covering PacWest Bancorp are now predicting revenues of US$1.12b in 2021. If met, this would reflect a huge 39% improvement in sales compared to the last 12 months. PacWest Bancorp is also expected to turn profitable, with statutory earnings of US$2.82 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.10b and earnings per share (EPS) of US$2.94 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$22.78, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic PacWest Bancorp analyst has a price target of US$26.50 per share, while the most pessimistic values it at US$19.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting PacWest Bancorp's growth to accelerate, with the forecast 39% growth ranking favourably alongside historical growth of 2.6% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect PacWest Bancorp to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$22.78, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on PacWest Bancorp. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for PacWest Bancorp going out to 2022, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with PacWest Bancorp , and understanding this should be part of your investment process.

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@simplywallst.com.