Shareholders in Invesco Ltd. (NYSE:IVZ) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term 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$20.27 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 the latest upgrade, the current consensus, from the twelve analysts covering Invesco, is for revenues of US$5.0b in 2021, which would reflect a substantial 20% reduction in Invesco's sales over the past 12 months. Per-share earnings are expected to soar 97% to US$2.13. Previously, the analysts had been modelling revenues of US$4.5b and earnings per share (EPS) of US$1.90 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 18% to US$18.82 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. There are some variant perceptions on Invesco, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$13.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 20%, a significant reduction from annual growth of 5.5% 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. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Invesco is expected to lag 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. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Invesco.
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 Invesco going out to 2023, 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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