Petroreconcavo S.A. (BVMF:RECV3) Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?

As you might know, Petroreconcavo S.A. (BVMF:RECV3) recently reported its yearly numbers. It was an okay result overall, with revenues coming in at R$3.3b, roughly what the analysts had been expecting. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Following the latest results, Petroreconcavo's twelve analysts are now forecasting revenues of R$3.65b in 2025. This would be a notable 12% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 128% to R$3.40. In the lead-up to this report, the analysts had been modelling revenues of R$3.69b and earnings per share (EPS) of R$3.82 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

View our latest analysis for Petroreconcavo

It might be a surprise to learn that the consensus price target was broadly unchanged at R$23.88, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Petroreconcavo analyst has a price target of R$32.00 per share, while the most pessimistic values it at R$20.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Petroreconcavo's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Petroreconcavo's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 33% 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 3.6% annually. So it's pretty clear that, while Petroreconcavo's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at R$23.88, 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. We have estimates - from multiple Petroreconcavo analysts - going out to 2027, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Petroreconcavo that you should be aware of.

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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.