Provident Financial Services, Inc. (NYSE:PFS) Analysts Just Trimmed Their Revenue Forecasts By 15%
One thing we could say about the analysts on Provident Financial Services, Inc. (NYSE:PFS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 4.5% to US$19.17 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the current consensus from Provident Financial Services' five analysts is for revenues of US$566m in 2023 which - if met - would reflect a meaningful 15% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$664m of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Provident Financial Services, given the substantial drop in revenue estimates.
See our latest analysis for Provident Financial Services
We'd point out that there was no major changes to their price target of US$20.40, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Provident Financial Services, with the most bullish analyst valuing it at US$24.00 and the most bearish at US$17.00 per share. 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 Provident Financial Services shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Provident Financial Services' growth to accelerate, with the forecast 33% annualised growth to the end of 2023 ranking favourably alongside historical growth of 10% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Provident Financial Services is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Provident Financial Services after today.
Thirsting for more data? At least one of Provident Financial Services' five analysts has provided estimates out to 2024, which can be seen for free 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.
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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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