Univest Financial Corporation (NASDAQ:UVSP) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 6.7% to hit US$77m. Univest Financial also reported a statutory profit of US$0.69, which was an impressive 34% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Univest Financial's three analysts are now forecasting revenues of US$295.2m in 2024. This would be a modest 3.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to descend 13% to US$2.08 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$289.6m and earnings per share (EPS) of US$1.95 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$21.67, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Univest Financial analyst has a price target of US$23.00 per share, while the most pessimistic values it at US$19.00. This is a very narrow spread of estimates, implying either that Univest Financial is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Univest Financial's revenue growth is expected to slow, with the forecast 4.3% annualised growth rate until the end of 2024 being well below the historical 8.0% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Univest Financial.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Univest Financial following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Univest Financial. Long-term earnings power is much more important than next year's profits. We have forecasts for Univest Financial going out to 2025, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Univest Financial that you should be aware of.
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