Stock Analysis

Oncoclínicas do Brasil Serviços Médicos S.A. (BVMF:ONCO3) Just Reported Earnings, And Analysts Cut Their Target Price

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BOVESPA:ONCO3
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Oncoclínicas do Brasil Serviços Médicos S.A. (BVMF:ONCO3) came out with its yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It was an okay result overall, with revenues coming in at R$2.7b, roughly what the analysts had been expecting. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Oncoclínicas do Brasil Serviços Médicos after the latest results.

Check out our latest analysis for Oncoclínicas do Brasil Serviços Médicos

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BOVESPA:ONCO3 Earnings and Revenue Growth April 3rd 2022

Following the latest results, Oncoclínicas do Brasil Serviços Médicos' five analysts are now forecasting revenues of R$4.36b in 2022. This would be a sizeable 61% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Oncoclínicas do Brasil Serviços Médicos forecast to report a statutory profit of R$0.43 per share. In the lead-up to this report, the analysts had been modelling revenues of R$4.33b and earnings per share (EPS) of R$0.51 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

The average price target fell 19% to R$19.00, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. Currently, the most bullish analyst values Oncoclínicas do Brasil Serviços Médicos at R$23.00 per share, while the most bearish prices it at R$17.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Oncoclínicas do Brasil Serviços Médicos shareholders.

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. The analysts are definitely expecting Oncoclínicas do Brasil Serviços Médicos' growth to accelerate, with the forecast 61% annualised growth to the end of 2022 ranking favourably alongside historical growth of 24% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 20% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Oncoclínicas do Brasil Serviços Médicos to grow faster than the wider industry.

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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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 Oncoclínicas do Brasil Serviços Médicos' future valuation.

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. At Simply Wall St, we have a full range of analyst estimates for Oncoclínicas do Brasil Serviços Médicos going out to 2024, and you can see them free on our platform here..

It might also be worth considering whether Oncoclínicas do Brasil Serviços Médicos' debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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