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Celebrations may be in order for Independent Bank Corporation (NASDAQ:IBCP) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
Following the latest upgrade, the four analysts covering Independent Bank provided consensus estimates of US$164m revenue in 2022, which would reflect an uncomfortable 20% decline on its sales over the past 12 months. Statutory earnings per share are supposed to dip 7.6% to US$2.57 in the same period. Before this latest update, the analysts had been forecasting revenues of US$134m and earnings per share (EPS) of US$2.30 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
See our latest analysis for Independent Bank
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$25.30, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Independent Bank at US$28.00 per share, while the most bearish prices it at US$22.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 25% by the end of 2022. This indicates a significant reduction from annual growth of 12% 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 7.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Independent Bank is expected to lag the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Independent Bank.