Analysts Are More Bearish On Orrstown Financial Services, Inc. (NASDAQ:ORRF) Than They Used To Be

The latest analyst coverage could presage a bad day for Orrstown Financial Services, Inc. (NASDAQ:ORRF), 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) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. The stock price has risen 6.2% to US$29.37 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the three analysts covering Orrstown Financial Services are now predicting revenues of US$144m in 2024. If met, this would reflect a notable 11% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to tumble 49% to US$1.71 in the same period. Previously, the analysts had been modelling revenues of US$160m and earnings per share (EPS) of US$2.27 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Orrstown Financial Services

Analysts made no major changes to their price target of US$31.67, suggesting the downgrades are not expected to have a long-term impact on Orrstown Financial Services' 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 Orrstown Financial Services' rate of growth is expected to accelerate meaningfully, with the forecast 11% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 9.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Orrstown Financial Services 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 Orrstown Financial Services. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will 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 Orrstown Financial Services after the downgrade.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Orrstown Financial Services analysts - going out to 2025, and you can see them 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 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.