Some Community West Bancshares (NASDAQ:CWBC) Analysts Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for Community West Bancshares (NASDAQ:CWBC), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After the downgrade, the five analysts covering Community West Bancshares are now predicting revenues of US$122m in 2024. If met, this would reflect a major 43% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 42% to US$0.72. Prior to this update, the analysts had been forecasting revenues of US$140m and earnings per share (EPS) of US$1.40 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.

View our latest analysis for Community West Bancshares

Analysts made no major changes to their price target of US$23.75, suggesting the downgrades are not expected to have a long-term impact on Community West Bancshares' 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. It's clear from the latest estimates that Community West Bancshares' rate of growth is expected to accelerate meaningfully, with the forecast 105% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 3.9% p.a. 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 6.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Community West Bancshares to grow faster 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 Community West Bancshares. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Community West Bancshares after the downgrade.

There might be good reason for analyst bearishness towards Community West Bancshares, like its declining profit margins. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.

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