Downgrade: Here's How Analysts See HomeStreet, Inc. (NASDAQ:HMST) Performing In The Near Term

Market forces rained on the parade of HomeStreet, Inc. (NASDAQ:HMST) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After the downgrade, the consensus from HomeStreet's three analysts is for revenues of US$231m in 2023, which would reflect an uneasy 14% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to nosedive 79% to US$0.57 in the same period. Prior to this update, the analysts had been forecasting revenues of US$263m and earnings per share (EPS) of US$2.14 in 2023. Indeed, we can see that the analysts are a lot more bearish about HomeStreet's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for HomeStreet

It'll come as no surprise then, to learn that the analysts have cut their price target 6.9% to US$20.25. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic HomeStreet analyst has a price target of US$25.00 per share, while the most pessimistic values it at US$11.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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 19% by the end of 2023. This indicates a significant reduction from annual growth of 1.7% 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 3.2% per year. It's pretty clear that HomeStreet's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple HomeStreet analysts - going out to 2024, and you can see them free on our platform here.

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.

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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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