Analysts Are More Bearish On Tecnisa S.A. (BVMF:TCSA3) Than They Used To Be

The analysts covering Tecnisa S.A. (BVMF:TCSA3) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory 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.

Following the downgrade, the latest consensus from Tecnisa's three analysts is for revenues of R$539m in 2023, which would reflect a substantial 127% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 604% to R$0.10. Prior to this update, the analysts had been forecasting revenues of R$619m and earnings per share (EPS) of R$0.23 in 2023. Indeed, we can see that the analysts are a lot more bearish about Tecnisa's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Tecnisa

Analysts made no major changes to their price target of R$3.53, suggesting the downgrades are not expected to have a long-term impact on Tecnisa's 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 Tecnisa at R$4.00 per share, while the most bearish prices it at R$3.10. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Tecnisa's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 127% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 14% 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 9.0% annually. Not only are Tecnisa's revenues expected to improve, it seems that the analysts are also expecting it to grow faster 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Tecnisa.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Tecnisa analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.