Time To Worry? Analysts Just Downgraded Their New York Community Bancorp, Inc. (NYSE:NYCB) Outlook

The analysts covering New York Community Bancorp, Inc. (NYSE:NYCB) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 9.1% to US$9.26 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After the downgrade, the nine analysts covering New York Community Bancorp are now predicting revenues of US$2.5b in 2023. If met, this would reflect a sizeable 77% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to drop 16% to US$1.06 in the same period. Before this latest update, the analysts had been forecasting revenues of US$2.7b and earnings per share (EPS) of US$1.18 in 2023. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a minor downgrade to earnings per share numbers as well.

See our latest analysis for New York Community Bancorp

Analysts made no major changes to their price target of US$10.54, suggesting the downgrades are not expected to have a long-term impact on New York Community Bancorp's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values New York Community Bancorp at US$14.00 per share, while the most bearish prices it at US$8.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. The analysts are definitely expecting New York Community Bancorp's growth to accelerate, with the forecast 58% annualised growth to the end of 2023 ranking favourably alongside historical growth of 2.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect New York Community Bancorp to grow faster than 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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of New York Community Bancorp going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple New York Community Bancorp analysts - going out to 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.