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Signature Bank (NASDAQ:SBNY) Analysts Are Reducing Their Forecasts For This Year

The latest analyst coverage could presage a bad day for Signature Bank (NASDAQ:SBNY), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the ten analysts covering Signature Bank provided consensus estimates of US$2.5b revenue in 2023, which would reflect a small 3.6% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to plummet 29% to US$14.81 in the same period. Before this latest update, the analysts had been forecasting revenues of US$2.8b and earnings per share (EPS) of US$17.47 in 2023. Indeed, we can see that the analysts are a lot more bearish about Signature Bank's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Signature Bank

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earnings-and-revenue-growth

It'll come as no surprise then, to learn that the analysts have cut their price target 6.8% to US$149. 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 Signature Bank analyst has a price target of US$200 per share, while the most pessimistic values it at US$124. 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 Signature Bank shareholders.

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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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 3.6% by the end of 2023. This indicates a significant reduction from annual growth of 19% 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 6.1% per year. It's pretty clear that Signature Bank's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Signature Bank. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Signature Bank's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Signature Bank.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Signature Bank analysts - going out to 2024, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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