Northern Trust Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Northern Trust Corporation (NASDAQ:NTRS) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Statutory revenue of US$2.7b and earnings of US$4.34 both blasted past expectations, beating expectations by 48% and 151%, respectively, ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Northern Trust

Following last week's earnings report, Northern Trust's twelve analysts are forecasting 2024 revenues to be US$7.64b, approximately in line with the last 12 months. Per-share earnings are expected to soar 21% to US$8.97. Before this earnings report, the analysts had been forecasting revenues of US$7.31b and earnings per share (EPS) of US$6.14 in 2024. So it seems there's been a definite increase in optimism about Northern Trust's future following the latest results, with a very substantial lift in the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of US$91.23, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Northern Trust at US$104 per share, while the most bearish prices it at US$84.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. We would highlight that Northern Trust's revenue growth is expected to slow, with the forecast 0.8% annualised growth rate until the end of 2024 being well below the historical 3.7% 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 5.5% annually. Factoring in the forecast slowdown in growth, it seems obvious that Northern Trust is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Northern Trust's earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at US$91.23, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Northern Trust going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 1 warning sign for Northern Trust you should know about.

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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.

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