One iStar Inc. (NYSE:STAR) Analyst Just Slashed Their Estimates By A Significant 50%

Market forces rained on the parade of iStar Inc. (NYSE:STAR) shareholders today, when the covering analyst downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 6.2% to US$17.72 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the consensus from solitary analyst covering iStar is for revenues of US$189m in 2021, implying a substantial 65% decline in sales compared to the last 12 months. Before the latest update, the analyst was foreseeing US$380m of revenue in 2021. It looks like forecasts have become a fair bit less optimistic on iStar, given the sizeable cut to revenue estimates.

Check out our latest analysis for iStar

The consensus price target rose 25% to US$21.00, with the analyst clearly more optimistic about iStar's prospects following this update. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on iStar, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$17.00 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 65% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 0.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.7% per year. It's pretty clear that iStar's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that the analyst slashing their revenue forecasts for iStar this year. They're also anticipating slower revenue growth than the wider market. There was also a nice increase in the price target, with the analyst apparently feeling that the intrinsic value of the business is improving. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of iStar going forwards.

Of course, this isn't the full story. One iStar broker/analyst has provided estimates out to 2022, which can be seen for free on our platform here.

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