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Shorn Like A Sheep: Analysts Just Shaved Their Assured Guaranty Ltd. (NYSE:AGO) Forecasts Dramatically

Simply Wall St
·3 min read

The analysts covering Assured Guaranty Ltd. (NYSE:AGO) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the consensus from four analysts covering Assured Guaranty is for revenues of US$744m in 2020, implying a stressful 20% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to plunge 42% to US$1.76 in the same period. Prior to this update, the analysts had been forecasting revenues of US$927m and earnings per share (EPS) of US$3.01 in 2020. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

View our latest analysis for Assured Guaranty

NYSE:AGO Past and Future Earnings May 12th 2020
NYSE:AGO Past and Future Earnings May 12th 2020

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. We would also point out that the forecast 20% revenue decline is roughly in line with the historical trend, which saw revenues shrink -18% annually over the past five years Yet our data suggests that other companies (with analyst coverage) in the industry are expected, in aggregate, to see their revenues rise 3.6% over the coming year. So it looks like Assured Guaranty's revenues are expected to decline at a slower rate than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Assured Guaranty, and a few readers might choose to steer clear of the stock.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Assured Guaranty analysts - going out to 2022, and you can see them 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.