News Flash: 5 Analysts Think Eastern Bankshares, Inc. (NASDAQ:EBC) Earnings Are Under Threat

The latest analyst coverage could presage a bad day for Eastern Bankshares, Inc. (NASDAQ:EBC), 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) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, Eastern Bankshares' five analysts currently expect revenues in 2023 to be US$739m, approximately in line with the last 12 months. Statutory earnings per share are expected to be US$1.23, roughly flat on the last 12 months. Prior to this update, the analysts had been forecasting revenues of US$863m and earnings per share (EPS) of US$1.61 in 2023. Indeed, we can see that the analysts are a lot more bearish about Eastern Bankshares' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Eastern Bankshares

It'll come as no surprise then, to learn that the analysts have cut their price target 15% to US$19.00. 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 Eastern Bankshares analyst has a price target of US$25.00 per share, while the most pessimistic values it at US$15.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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 pretty clear that there is an expectation that Eastern Bankshares' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 1.8% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that Eastern Bankshares is also expected to grow slower than other industry participants.

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 Eastern Bankshares. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Eastern Bankshares' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Eastern Bankshares 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.