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Celebrations may be in order for The Bancorp, Inc. (NASDAQ:TBBK) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Bancorp will make substantially more sales than they'd previously expected.
After the upgrade, the consensus from Bancorp's three analysts is for revenues of US$396m in 2023, which would reflect a perceptible 4.9% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$357m of revenue in 2023. It looks like there's been a clear increase in optimism around Bancorp, given the nice increase in revenue forecasts.
See our latest analysis for Bancorp
We'd point out that there was no major changes to their price target of US$42.00, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Bancorp, with the most bullish analyst valuing it at US$46.00 and the most bearish at US$38.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
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. We would highlight that sales are expected to reverse, with a forecast 9.6% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 9.5% 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 4.4% per year. It's pretty clear that Bancorp's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Bancorp.