Need To Know: The Consensus Just Cut Its Petro Rio S.A. (BVMF:PRIO3) Estimates For 2022

Market forces rained on the parade of Petro Rio S.A. (BVMF:PRIO3) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the eight analysts covering Petro Rio are now predicting revenues of R$4.7b in 2022. If met, this would reflect an okay 7.8% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing R$5.3b of revenue in 2022. The consensus view seems to have become more pessimistic on Petro Rio, noting the substantial drop in revenue estimates in this update.

See our latest analysis for Petro Rio

We'd point out that there was no major changes to their price target of R$30.63, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Petro Rio analyst has a price target of R$47.00 per share, while the most pessimistic values it at R$21.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Petro Rio's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 7.8% growth on an annualised basis. This is compared to a historical growth rate of 44% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.6% annually. Even after the forecast slowdown in growth, it seems obvious that Petro Rio is also expected to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Petro Rio this year. They're also forecasting more rapid revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Petro Rio going forwards.

Looking for more information? We have estimates for Petro Rio from its eight analysts out until 2024, and you can see them 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.