Here’s what analysts predict next
Shareholders of Western Alliance Bancorporation (NYSE: WAL) will rejoice this week, as the stock price is up 14% to US $ 42.15 following its latest third quarter results. This appears to be an overall credible result – although revenue of $ 313 million was what analysts expected, Western Alliance Bancorporation surprised with a (statutory) profit of US $ 1.36 per share, an impressive 35%. above forecasts. Analysts usually update their forecasts with each earnings report, and we can judge from their estimates whether their view of the business has changed or if there are new concerns to consider. With that in mind, we’ve rounded up the latest statutory forecast to see what analysts expect for next year.
Based on the latest results, the most recent consensus for Western Alliance Bancorporation of nine analysts is revenue of US $ 1.23 billion in 2021 which, if achieved, would represent a decent 20% increase in its sales over the past 12 months. Statutory earnings per share are expected to increase 5.2% to US $ 4.61. Before this report was written, analysts had modeled revenues of US $ 1.22 billion and earnings per share (EPS) of US $ 4.46 in 2021. Analysts appear to have become more bullish on the company, judging by their new profits by sharing estimates.
Analysts raised their price targets following the higher earnings, with the consensus price target rising 6.7% to US $ 44.73. The consensus price target is only an average of individual analysts’ targets, so it might be helpful to see the breadth of the range of underlying estimates. Western Alliance Bancorporation’s most bullish analyst has a price target of US $ 50.00 per share, while the most pessimistic puts it at US $ 41.00. The narrowness of the estimates could suggest that the future of the company is relatively easy to assess or that analysts have a solid view of its prospects.
Looking at the big picture now, one of the ways we can understand these predictions is to compare them to past performance and industry growth estimates. It is clear from the latest estimates that Western Alliance Bancorporation’s growth rate is expected to accelerate significantly, with a revenue growth forecast of 20% significantly faster than its historic growth of 14% per year over the past five years. years. Compare that with other companies in the same industry, which are expected to increase their revenues by 1.4% next year. Given the expected acceleration in revenues, it’s pretty clear that Western Alliance Bancorporation is expected to grow much faster than its industry.
The bottom line
The most important thing here is that analysts have improved their earnings per share estimates, suggesting that there has been a marked increase in optimism towards Western Alliance Bancorporation as a result of these results. Fortunately, they also reconfirmed their revenue figures, suggesting that sales are moving according to expectations – and our data suggests that revenue is expected to grow faster than the industry as a whole. We note an improvement in the price target, suggesting that analysts believe the intrinsic value of the company is likely to improve over time.
With that in mind, we wouldn’t be too quick to come to a conclusion on Western Alliance Bancorporation. Long-term earning power is much more important than next year’s profits. We have estimates – from several analysts at Western Alliance Bancorporation – going through 2022, and you can see them for free on our platform here.
However, you should always think about the risks. Concrete example, we have spotted 2 warning signs for Western Alliance Bancorporation you must be aware.
This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.