Rainbows and Unicorns: The Bancorp, Inc. (NASDAQ:TBBK) Analysts Just Became A Lot More Optimistic

The Bancorp, Inc. (NASDAQ:TBBK) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 11% to US$27.81 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following this upgrade, Bancorp's twin analysts are forecasting 2023 revenues to be US$321m, approximately in line with the last 12 months. Per-share earnings are expected to bounce 54% to US$3.22. Prior to this update, the analysts had been forecasting revenues of US$288m and earnings per share (EPS) of US$2.92 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Our analysis indicates that TBBK is potentially undervalued!

With these upgrades, we're not surprised to see that the analysts have lifted their price target 9.4% to US$35.00 per share. 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. Currently, the most bullish analyst values Bancorp at US$38.00 per share, while the most bearish prices it at US$32.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Bancorp's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.4% by the end of 2023. This indicates a significant reduction from annual growth of 9.3% 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 6.2% annually for the foreseeable future. It's pretty clear that Bancorp's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Bancorp could be worth investigating further.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Bancorp going out as far as 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.

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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.