Analysts Have Just Cut Their Enauta Participações S.A. (BVMF:ENAT3) Revenue Estimates By 30%

Today is shaping up negative for Enauta Participações S.A. (BVMF:ENAT3) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Shares are up 4.9% to R$12.89 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After this downgrade, Enauta Participações' five analysts are now forecasting revenues of R$2.2b in 2023. This would be a meaningful 8.0% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of R$3.1b in 2023. The consensus view seems to have become more pessimistic on Enauta Participações, noting the pretty serious reduction to revenue estimates in this update.

See our latest analysis for Enauta Participações

We'd point out that there was no major changes to their price target of R$19.18, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. There are some variant perceptions on Enauta Participações, with the most bullish analyst valuing it at R$26.00 and the most bearish at R$13.80 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Enauta Participações' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.9% annually. So it's clear that despite the slowdown in growth, Enauta Participações is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Enauta Participações this year. They're also forecasting for revenues to perform better than companies in the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Enauta Participações after today.

There might be good reason for analyst bearishness towards Enauta Participações, like its declining profit margins. For more information, you can click here to discover this and the 1 other risk we've identified.

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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