Cause For Concern? One Analyst Thinks Cambridge Bancorp's (NASDAQ:CATC) Revenues Are Under Threat

Market forces rained on the parade of Cambridge Bancorp (NASDAQ:CATC) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At US$63.71, shares are up 6.9% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After the downgrade, the consensus from Cambridge Bancorp's one analyst is for revenues of US$110m in 2024, which would reflect a stressful 28% decline in sales compared to the last year of performance. Per-share earnings are expected to expand 15% to US$4.19. Prior to this update, the analyst had been forecasting revenues of US$140m and earnings per share (EPS) of US$4.43 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a pretty serious reduction to revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for Cambridge Bancorp

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Cambridge Bancorp's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 36% by the end of 2024. This indicates a significant reduction from annual growth of 11% 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 5.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cambridge Bancorp is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Cambridge Bancorp's revenues are expected to grow slower 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 Cambridge Bancorp after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Cambridge Bancorp going out as far as 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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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.