Arezzo Indústria e Comércio S.A. (BVMF:ARZZ3) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
After the upgrade, the seven analysts covering Arezzo Indústria e Comércio are now predicting revenues of R$2.3b in 2021. If met, this would reflect a substantial 35% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing R$2.0b of revenue in 2021. The consensus has definitely become more optimistic, showing a solid increase in revenue forecasts.
There was no particular change to the consensus price target of R$80.08, with Arezzo Indústria e Comércio's latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Arezzo Indústria e Comércio at R$92.00 per share, while the most bearish prices it at R$52.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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 Arezzo Indústria e Comércio's rate of growth is expected to accelerate meaningfully, with the forecast 50% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 7.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Arezzo Indústria e Comércio to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. Analysts also expect revenues to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Arezzo Indústria e Comércio.
Looking for more information? At least one of Arezzo Indústria e Comércio's seven analysts has provided estimates out to 2024, which can be seen for free on our platform here.
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