Market forces rained on the parade of MBIA Inc. (NYSE:MBI) shareholders today, when the analysts downgraded their 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.
Following the downgrade, the latest consensus from MBIA's two analysts is for revenues of US$110m in 2021, which would reflect a huge 45% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$132m in 2021. It looks like forecasts have become a fair bit less optimistic on MBIA, given the measurable cut to revenue estimates.
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. One thing stands out from these estimates, which is that MBIA is forecast to grow faster in the future than it has in the past, with revenues expected to display 109% annualised growth until the end of 2021. If achieved, this would be a much better result than the 10% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.5% annually. Not only are MBIA's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow faster than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on MBIA after today.
Thirsting for more data? We have estimates for MBIA from its two analysts out until 2022, and you can see them free on our platform here.
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