Things Look Grim For Orrstown Financial Services, Inc. (NASDAQ:ORRF) After Today's Downgrade
One thing we could say about the analysts on Orrstown Financial Services, Inc. (NASDAQ:ORRF) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. At US$29.37, shares are up 6.2% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the most recent consensus for Orrstown Financial Services from its three analysts is for revenues of US$144m in 2024 which, if met, would be a decent 11% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to plummet 49% to US$1.71 in the same period. Before this latest update, the analysts had been forecasting revenues of US$160m and earnings per share (EPS) of US$2.27 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.
Check out our latest analysis for Orrstown Financial Services
Analysts made no major changes to their price target of US$31.67, suggesting the downgrades are not expected to have a long-term impact on Orrstown Financial Services' valuation.
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 Orrstown Financial Services' growth to accelerate, with the forecast 11% annualised growth to the end of 2024 ranking favourably alongside historical growth of 9.5% 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 5.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Orrstown 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 earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Orrstown Financial Services.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Orrstown Financial Services analysts - going out to 2025, 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.
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