Stock Analysis

This Just In: Analysts Are Boosting Their Moelis & Company (NYSE:MC) Outlook for This Year

NYSE:MC
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Shareholders in Moelis & Company (NYSE:MC) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The stock price has risen 6.3% to US$58.12 over the past week, suggesting investors are becoming more optimistic. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following this upgrade, Moelis' nine analysts are forecasting 2021 revenues to be US$1.2b, approximately in line with the last 12 months. Statutory earnings per share are supposed to sink 15% to US$4.10 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.1b and earnings per share (EPS) of US$3.56 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Moelis

earnings-and-revenue-growth
NYSE:MC Earnings and Revenue Growth July 23rd 2021

Despite these upgrades, the analysts have not made any major changes to their price target of US$63.57, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Moelis, with the most bullish analyst valuing it at US$64.00 and the most bearish at US$59.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Moelis is an easy business to forecast or the underlying assumptions are obvious.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.9% by the end of 2021. This indicates a significant reduction from annual growth of 10% 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 0.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Moelis 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 this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Moelis.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential flags with Moelis, including dilutive stock issuance over the past year. You can learn more, and discover the 2 other flags we've identified, for 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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This article by Simply Wall St is general in nature. 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.
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