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Western Alliance Bancorporation Just Recorded A 35% EPS Beat: Here's What Analysts Are Forecasting Next

Shareholders of Western Alliance Bancorporation (NYSE:WAL) will be pleased this week, given that the stock price is up 14% to US$42.15 following its latest third-quarter results. It looks like a credible result overall - although revenues of US$313m were what the analysts expected, Western Alliance Bancorporation surprised by delivering a (statutory) profit of US$1.36 per share, an impressive 35% above what was 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Western Alliance Bancorporation

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Taking into account the latest results, the most recent consensus for Western Alliance Bancorporation from nine analysts is for revenues of US$1.23b in 2021 which, if met, would be a decent 20% increase on its sales over the past 12 months. Statutory earnings per share are predicted to increase 5.2% to US$4.61. In the lead-up to this report, the analysts had been modelling revenues of US$1.22b and earnings per share (EPS) of US$4.46 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.7% to US$44.73. 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 Western Alliance Bancorporation analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$41.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. It's clear from the latest estimates that Western Alliance Bancorporation's rate of growth is expected to accelerate meaningfully, with the forecast 20% revenue growth noticeably faster than its historical growth of 14%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.4% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Western Alliance Bancorporation is expected to grow much faster than its industry.

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 Western Alliance Bancorporation following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Western Alliance Bancorporation. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Western Alliance Bancorporation analysts - going out to 2022, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Western Alliance Bancorporation you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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