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Berkshire Hills Bancorp, Inc. (NYSE:BHLB) shareholders are probably feeling a little disappointed, since its shares fell 5.6% to US$29.55 in the week after its latest annual results. Results overall were respectable, with statutory earnings of US$2.39 per share roughly in line with what the analysts had forecast. Revenues of US$435m came in 8.5% ahead of analyst predictions. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the six analysts covering Berkshire Hills Bancorp provided consensus estimates of US$379.9m revenue in 2022, which would reflect a not inconsiderable 13% decline on its sales over the past 12 months. Statutory earnings per share are forecast to dive 29% to US$1.75 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$369.6m and earnings per share (EPS) of US$1.58 in 2022. So it seems there's been a definite increase in optimism about Berkshire Hills Bancorp's future following the latest results, with a solid gain to the earnings per share forecasts in particular.
It will come as no surprise to learn that the analysts have increased their price target for Berkshire Hills Bancorp 6.2% to US$31.50on the back of these upgrades. 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 Berkshire Hills Bancorp analyst has a price target of US$33.00 per share, while the most pessimistic values it at US$29.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Berkshire Hills Bancorp is an easy business to forecast or the the analysts are all using similar assumptions.
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 annualised revenue decline of 13% by the end of 2022. This indicates a significant reduction from annual growth of 2.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.0% per year. It's pretty clear that Berkshire Hills Bancorp's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Berkshire Hills Bancorp following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Berkshire Hills 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 Berkshire Hills Bancorp going out to 2023, 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 2 warning signs with Berkshire Hills Bancorp (at least 1 which is potentially serious) , and understanding them should be part of your investment process.
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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.