OFG Bancorp (NYSE:OFG) Released Earnings Last Week And Analysts Lifted Their Price Target To US$35.33

By
Simply Wall St
Published
January 22, 2022
NYSE:OFG
Source: Shutterstock

There's been a notable change in appetite for OFG Bancorp (NYSE:OFG) shares in the week since its full-year report, with the stock down 11% to US$27.04. It looks like the results were a bit of a negative overall. While revenues of US$540m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.9% to hit US$2.81 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for OFG Bancorp

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NYSE:OFG Earnings and Revenue Growth January 22nd 2022

After the latest results, the three analysts covering OFG Bancorp are now predicting revenues of US$552.9m in 2022. If met, this would reflect a reasonable 2.3% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 4.8% to US$2.78 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$542.9m and earnings per share (EPS) of US$2.80 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.2% to US$35.33. It looks as though they previously had some doubts over whether the business would live up to their expectations. 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 OFG Bancorp analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$35.00. This is a very narrow spread of estimates, implying either that OFG Bancorp is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that OFG Bancorp's revenue growth is expected to slow, with the forecast 2.3% annualised growth rate until the end of 2022 being well below the historical 12% 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 5.0% 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 OFG Bancorp.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 OFG Bancorp going out to 2023, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 2 warning signs for OFG Bancorp (1 is significant!) that you need to be mindful of.

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