Analysts Are More Bearish On Signature Bank (NASDAQ:SBNY) Than They Used To Be

Market forces rained on the parade of Signature Bank (NASDAQ:SBNY) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. At US$128, shares are up 8.0% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the latest downgrade, the current consensus, from the ten analysts covering Signature Bank, is for revenues of US$2.5b in 2023, which would reflect a small 4.1% reduction in Signature Bank's sales over the past 12 months. Statutory earnings per share are anticipated to plummet 29% to US$14.85 in the same period. Previously, the analysts had been modelling revenues of US$2.8b and earnings per share (EPS) of US$17.47 in 2023. Indeed, we can see that the analysts are a lot more bearish about Signature Bank's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Signature Bank

It'll come as no surprise then, to learn that the analysts have cut their price target 7.3% to US$148. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Signature Bank analyst has a price target of US$200 per share, while the most pessimistic values it at US$113. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Signature Bank's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 4.1% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 19% 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 6.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Signature Bank is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Signature Bank.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Signature Bank going out to 2024, 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.