The Raia Drogasil S.A. (BVMF:RADL3) Yearly Results Are Out And Analysts Have Published New Forecasts

Investors in Raia Drogasil S.A. (BVMF:RADL3) had a good week, as its shares rose 6.7% to close at R$24.00 following the release of its yearly results. Raia Drogasil reported R$29b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of R$0.60 beat expectations, being 4.4% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Raia Drogasil

Taking into account the latest results, the consensus forecast from Raia Drogasil's eleven analysts is for revenues of R$33.7b in 2023, which would reflect a decent 16% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 28% to R$0.77. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$33.7b and earnings per share (EPS) of R$0.73 in 2023. So the consensus seems to have become somewhat more optimistic on Raia Drogasil's earnings potential following these results.

There's been no major changes to the consensus price target of R$27.13, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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 Raia Drogasil at R$33.00 per share, while the most bearish prices it at R$23.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Raia Drogasil's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Raia Drogasil'shistorical trends, as the 16% annualised revenue growth to the end of 2023 is roughly in line with the 16% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 15% annually. It's clear that while Raia Drogasil's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Raia Drogasil's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at R$27.13, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Raia Drogasil going out to 2025, and you can see them free on our platform here..

It might also be worth considering whether Raia Drogasil's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.