Mack-Cali Realty Corporation (NYSE:CLI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company’s business prospects.
After this upgrade, Mack-Cali Realty’s three analysts are now forecasting revenues of US$317m in 2021. This would be a credible 5.5% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 72% to US$0.39. Yet before this consensus update, the analysts had been forecasting revenues of US$277m and losses of US$0.55 per share in 2021. We can see there’s definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year’s revenue estimates, while at the same time reducing their loss estimates.
View our latest analysis for Mack-Cali Realty
NYSE:CLI Earnings and Revenue Growth July 20th 2021
Despite these upgrades, the analysts have not made any major changes to their price target of US$18.07, implying that their latest estimates don’t have a long term impact on what they think the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. The most optimistic Mack-Cali Realty analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$15.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. For example, we noticed that Mack-Cali Realty’s rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 7.5% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 18% a year 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 6.6% annually. So it looks like Mack-Cali Realty is expected to grow at about the same rate as the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Mack-Cali Realty is moving incrementally towards profitability. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive – assuming these forecasts are met! So Mack-Cali Realty could be a good candidate for more research.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Mack-Cali Realty going out to 2023, and you can see them free on our platform here..
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