Rainbows and Unicorns: Empire State Realty Trust, Inc. (NYSE:ESRT) Analysts Just Became A Lot More Optimistic

Celebrations may be in order for Empire State Realty Trust, Inc. (NYSE:ESRT) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 7.2% over the past week, closing at US$8.09. Could this big upgrade push the stock even higher?

Following the upgrade, the most recent consensus for Empire State Realty Trust from its three analysts is for revenues of US$721m in 2022 which, if met, would be a notable 9.9% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 81% to US$0.089. Before this latest update, the analysts had been forecasting revenues of US$580m and earnings per share (EPS) of US$0.049 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for Empire State Realty Trust

Despite these upgrades, the consensus price target fell 9.1% to US$8.54, perhaps signalling that the uplift in performance is not expected to last. 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. The most optimistic Empire State Realty Trust analyst has a price target of US$10.50 per share, while the most pessimistic values it at US$5.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. For example, we noticed that Empire State Realty Trust's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 21% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 3.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.1% per year. Not only are Empire State Realty Trust'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 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Empire State Realty Trust could be one for the watch list.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Empire State Realty Trust analysts - 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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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.