Manulife Financial Corporation (TSE:MFC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Manulife Financial will make substantially more sales than they’d previously expected.
After this upgrade, Manulife Financial’s 14 analysts are now forecasting revenues of CA$72b in 2023. This would be a huge 373% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to fall 12% to CA$3.30 in the same period. Before this latest update, the analysts had been forecasting revenues of CA$59b and earnings per share (EPS) of CA$3.16 in 2023. Sentiment certainly seems to have improved in recent times, with a great increase in revenue and a small increase to earnings per share estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of CA$28.72, suggesting that the forecast performance does not have a long term impact on the company’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 Manulife Financial analyst has a price target of CA$34.00 per share, while the most pessimistic values it at CA$25.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Manulife Financial is forecast to grow faster in the future than it has in the past, with revenues expected to display 4x annualised growth until the end of 2023. If achieved, this would be a much better result than the 6.5% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 12% annually. Not only are Manulife Financial’s revenues expected to improve, it seems that the analysts are also expecting it to grow faster than 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster 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 Manulife Financial.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Manulife Financial going out to 2025, and you can see them free on our platform here..
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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