Industry Analysts Just Upgraded Their 3R Petroleum Óleo e Gás S.A. (BVMF:RRRP3) Revenue Forecasts By 13%

Shareholders in 3R Petroleum Óleo e Gás S.A. (BVMF:RRRP3) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for next year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

After the upgrade, the nine analysts covering 3R Petroleum Óleo e Gás are now predicting revenues of R$7.1b in 2023. If met, this would reflect a major 363% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 1,032% to R$12.12. Previously, the analysts had been modelling revenues of R$6.2b and earnings per share (EPS) of R$12.23 in 2023. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for 3R Petroleum Óleo e Gás

Even though revenue forecasts increased, there was no change to the consensus price target of R$85.84, suggesting the analysts are focused on earnings as the driver of value creation. 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. There are some variant perceptions on 3R Petroleum Óleo e Gás, with the most bullish analyst valuing it at R$106 and the most bearish at R$66.50 per share. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that 3R Petroleum Óleo e Gás' rate of growth is expected to accelerate meaningfully, with the forecast 241% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 67% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 5.7% per year. So it's clear with the acceleration in growth, 3R Petroleum Óleo e Gás is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at 3R Petroleum Óleo e Gás.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for 3R Petroleum Óleo e Gás going out to 2025, and you can see them free on our 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.