Some Analysts Just Cut Their UWM Holdings Corporation (NYSE:UWMC) Estimates

The analysts covering UWM Holdings Corporation (NYSE:UWMC) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from UWM Holdings' seven analysts is for revenues of US$1.7b in 2023, which would reflect a not inconsiderable 14% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to leap 203% to US$0.26. Before this latest update, the analysts had been forecasting revenues of US$1.7b and earnings per share (EPS) of US$0.36 in 2023. From this we can that analyst sentiment has definitely become more bearish after the latest update, leading to lower revenue forecasts and a pretty serious decline to earnings per share estimates.

Check out our latest analysis for UWM Holdings

Analysts made no major changes to their price target of US$4.70, suggesting the downgrades are not expected to have a long-term impact on UWM Holdings' 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. There are some variant perceptions on UWM Holdings, with the most bullish analyst valuing it at US$6.50 and the most bearish at US$3.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. One more thing stood out to us about these estimates, and it's the idea that UWM Holdings' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 18% to the end of 2023. This tops off a historical decline of 12% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 8.4% per year. So while a broad number of companies are forecast to grow, unfortunately UWM Holdings is expected to see its sales affected worse than other companies in the 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on UWM Holdings after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with UWM Holdings, including the risk of cutting its dividend. Learn more, and discover the 1 other risk 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 downgrading 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. 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.