Analysts Are Upgrading CVC Brasil Operadora e Agência de Viagens S.A. (BVMF:CVCB3) After Its Latest Results

It's been a mediocre week for CVC Brasil Operadora e Agência de Viagens S.A. (BVMF:CVCB3) shareholders, with the stock dropping 13% to R$6.94 in the week since its latest second-quarter results. Revenues fell badly short of expectations, with sales of R$270m, missing analyst estimates by 25%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for CVC Brasil Operadora e Agência de Viagens

After the latest results, the five analysts covering CVC Brasil Operadora e Agência de Viagens are now predicting revenues of R$1.46b in 2022. If met, this would reflect a huge 32% improvement in sales compared to the last 12 months. CVC Brasil Operadora e Agência de Viagens is also expected to turn profitable, with statutory earnings of R$0.25 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of R$1.37b and losses of R$0.57 per share in 2022. The analysts have definitely been lifting their expectations, with the company expected to reach profitability next year - sooner than expected - thanks to the modest lift to revenue expectations.

Despite these upgrades, the consensus price target fell 16% to R$15.42, perhaps signalling that the uplift in performance is not expected to last. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic CVC Brasil Operadora e Agência de Viagens analyst has a price target of R$33.00 per share, while the most pessimistic values it at R$9.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that CVC Brasil Operadora e Agência de Viagens is forecast to grow faster in the future than it has in the past, with revenues expected to display 75% annualised growth until the end of 2022. If achieved, this would be a much better result than the 12% annual decline 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 19% annually. So it looks like CVC Brasil Operadora e Agência de Viagens is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analysts now expect CVC Brasil Operadora e Agência de Viagens to become profitable next year, compared to previous expectations that it would report a loss. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of CVC Brasil Operadora e Agência de Viagens' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on CVC Brasil Operadora e Agência de Viagens. Long-term earnings power is much more important than next year's profits. We have forecasts for CVC Brasil Operadora e Agência de Viagens going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with CVC Brasil Operadora e Agência de Viagens (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

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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.