Rede D'Or São Luiz S.A. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

It's been a pretty great week for Rede D'Or São Luiz S.A. (BVMF:RDOR3) shareholders, with its shares surging 12% to R$29.52 in the week since its latest quarterly results. Revenues of R$12b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of R$0.36 an impressive 27% ahead of estimates. 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.

Check out our latest analysis for Rede D'Or São Luiz

Following the latest results, Rede D'Or São Luiz's nine analysts are now forecasting revenues of R$53.5b in 2024. This would be a meaningful 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 24% to R$1.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$53.0b and earnings per share (EPS) of R$1.29 in 2024. So the consensus seems to have become somewhat more optimistic on Rede D'Or São Luiz's earnings potential following these results.

The consensus price target was unchanged at R$33.73, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Rede D'Or São Luiz analyst has a price target of R$40.00 per share, while the most pessimistic values it at R$28.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Rede D'Or São Luiz's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Rede D'Or São Luiz's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 30% 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 9.2% annually. So it's pretty clear that, while Rede D'Or São Luiz's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Rede D'Or São Luiz's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Rede D'Or São Luiz analysts - going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Rede D'Or São Luiz's balance sheet, and whether we think Rede D'Or São Luiz is carrying too much debt, for free on our platform here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.