Heritage Commerce Corp Just Missed EPS By 6.4%: Here's What Analysts Think Will Happen Next

It's shaping up to be a tough period for Heritage Commerce Corp (NASDAQ:HTBK), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Heritage Commerce missed analyst forecasts, with revenues of US$42m and statutory earnings per share (EPS) of US$0.17, falling short by 2.4% and 6.4% respectively. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Heritage Commerce

After the latest results, the consensus from Heritage Commerce's six analysts is for revenues of US$177.1m in 2024, which would reflect a discernible 2.4% decline in revenue compared to the last year of performance. Statutory earnings per share are forecast to fall 12% to US$0.80 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$178.1m and earnings per share (EPS) of US$0.79 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$10.58. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Heritage Commerce analyst has a price target of US$11.00 per share, while the most pessimistic values it at US$10.00. This is a very narrow spread of estimates, implying either that Heritage Commerce is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.2% by the end of 2024. This indicates a significant reduction from annual growth of 9.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Heritage Commerce is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Heritage Commerce's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Heritage Commerce analysts - going out to 2025, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Heritage Commerce (1 makes us a bit uncomfortable!) that you need to be mindful of.

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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.