These Analysts Just Made A Huge Downgrade To Their Tecnisa S.A. (BVMF:TCSA3) EPS Forecasts

Market forces rained on the parade of Tecnisa S.A. (BVMF:TCSA3) shareholders today, when the analysts downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After the downgrade, the two analysts covering Tecnisa are now predicting revenues of R$573m in 2024. If met, this would reflect a sizeable 48% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 185% to R$0.64. Prior to this update, the analysts had been forecasting revenues of R$661m and earnings per share (EPS) of R$1.19 in 2024. Indeed, we can see that the analysts are a lot more bearish about Tecnisa's prospects, administering a substantial drop in 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$3.78, suggesting the downgrades are not expected to have a long-term impact on Tecnisa's valuation.

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 37% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 2.4% 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 15% 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 biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Tecnisa. 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 next 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. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.