Northwest Bancshares, Inc. (NASDAQ:NWBI) Just Reported Earnings, And Analysts Cut Their Target Price

Investors in Northwest Bancshares, Inc. (NASDAQ:NWBI) had a good week, as its shares rose 2.7% to close at US$11.00 following the release of its first-quarter results. Northwest Bancshares reported in line with analyst predictions, delivering revenues of US$131m and statutory earnings per share of US$0.23, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Northwest Bancshares

Following last week's earnings report, Northwest Bancshares' five analysts are forecasting 2024 revenues to be US$530.3m, approximately in line with the last 12 months. Statutory earnings per share are expected to crater 27% to US$0.75 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$542.6m and earnings per share (EPS) of US$0.93 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 6.5% to US$11.50. 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. There are some variant perceptions on Northwest Bancshares, with the most bullish analyst valuing it at US$12.50 and the most bearish at US$10.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Northwest Bancshares' revenue growth is expected to slow, with the forecast 1.9% annualised growth rate until the end of 2024 being well below the historical 5.7% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.9% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Northwest Bancshares.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Northwest Bancshares. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Northwest Bancshares analysts - going out to 2025, and you can see them free on our platform here.

Even so, be aware that Northwest Bancshares is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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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.