PacWest Bancorp (NASDAQ:PACW) shares fell 3.5% to US$36.66 in the week since its latest full-year results. Results look mixed - while revenue fell marginally short of analyst estimates at US$1.1b, statutory earnings beat expectations 2.9%, with PacWest Bancorp reporting profits of US$3.90 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the eleven analysts covering PacWest Bancorp provided consensus estimates of US$1.10b revenue in 2020, which would reflect a perceptible 2.8% decline on its sales over the past 12 months. Statutory earnings per share are forecast to fall 14% to US$3.36 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.13b and earnings per share (EPS) of US$3.46 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a small dip in earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$39.95 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on PacWest Bancorp, with the most bullish analyst valuing it at US$43.00 and the most bearish at US$37.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.8% a significant reduction from annual growth of 8.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 4.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect PacWest Bancorp to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for PacWest Bancorp going out to 2021, and you can see them free on our platform here..
It might also be worth considering whether PacWest Bancorp's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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