Analysts Have Just Cut Their Home Point Capital Inc. (NASDAQ:HMPT) Revenue Estimates By 18%
Market forces rained on the parade of Home Point Capital Inc. (NASDAQ:HMPT) shareholders today, when the analysts 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.
Following the downgrade, the consensus from nine analysts covering Home Point Capital is for revenues of US$1.1b in 2021, implying a disturbing 20% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to plummet 41% to US$2.60 in the same period. Previously, the analysts had been modelling revenues of US$1.4b and earnings per share (EPS) of US$2.65 in 2021. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.
Check out our latest analysis for Home Point Capital
It will come as no surprise then, that the consensus price target fell 8.5% to US$13.45 following these changes. 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. There are some variant perceptions on Home Point Capital, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$10.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 26% by the end of 2021. This indicates a significant reduction from annual growth of 454% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 3.8% annually for the foreseeable future. The forecasts do look bearish for Home Point Capital, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Home Point Capital's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Home Point Capital going forwards.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Home Point Capital, including concerns around earnings quality. For more information, you can click here to discover this and the 1 other concern we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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