Today is shaping up negative for MidWestOne Financial Group, Inc. (NASDAQ:MOFG) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Shares are up 7.8% to US$21.13 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After the downgrade, the consensus from MidWestOne Financial Group's four analysts is for revenues of US$162m in 2024, which would reflect a small 7.0% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to grow 16% to US$2.51. Before this latest update, the analysts had been forecasting revenues of US$181m and earnings per share (EPS) of US$2.71 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a small dip in earnings per share numbers as well.

View our latest analysis for MidWestOne Financial Group

Analysts made no major changes to their price target of US$24.25, suggesting the downgrades are not expected to have a long-term impact on MidWestOne Financial Group's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MidWestOne Financial Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 5.7% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 9.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - MidWestOne Financial Group is expected to lag 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 stark change in sentiment, we'd understand if investors became more cautious on MidWestOne Financial Group after today.