Investors in Palomar Holdings, Inc. (NASDAQ:PLMR) had a good week, as its shares rose 6.7% to close at US$55.23 following the release of its annual results. Results overall were respectable, with statutory earnings of US$1.76 per share roughly in line with what the analysts had forecast. Revenues of US$248m came in 3.8% ahead of analyst predictions. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the seven analysts covering Palomar Holdings are now predicting revenues of US$349.7m in 2022. If met, this would reflect a substantial 41% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 54% to US$2.77. Before this earnings report, the analysts had been forecasting revenues of US$348.6m and earnings per share (EPS) of US$2.68 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target fell 5.3% to US$78.86, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. 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. There are some variant perceptions on Palomar Holdings, with the most bullish analyst valuing it at US$87.00 and the most bearish at US$55.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Palomar Holdings shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Palomar Holdings' growth to accelerate, with the forecast 41% annualised growth to the end of 2022 ranking favourably alongside historical growth of 31% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Palomar Holdings to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Palomar Holdings following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Palomar Holdings' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Palomar Holdings analysts - going out to 2023, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Palomar Holdings .
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.