Need To Know: The Consensus Just Cut Its Caixa Seguridade Participações S.A. (BVMF:CXSE3) Estimates For 2022

One thing we could say about the analysts on Caixa Seguridade Participações S.A. (BVMF:CXSE3) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the current consensus from Caixa Seguridade Participações' five analysts is for revenues of R$3.6b in 2022 which - if met - would reflect a major 35% increase on its sales over the past 12 months. Per-share earnings are expected to leap 37% to R$0.92. Before this latest update, the analysts had been forecasting revenues of R$4.3b and earnings per share (EPS) of R$0.94 in 2022. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

Check out our latest analysis for Caixa Seguridade Participações

Analysts made no major changes to their price target of R$13.21, suggesting the downgrades are not expected to have a long-term impact on Caixa Seguridade Participações' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Caixa Seguridade Participações, with the most bullish analyst valuing it at R$18.00 and the most bearish at R$7.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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 Caixa Seguridade Participações' growth to accelerate, with the forecast 50% annualised growth to the end of 2022 ranking favourably alongside historical growth of 9.3% 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 9.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Caixa Seguridade Participações to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Caixa Seguridade Participações. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Caixa Seguridade Participações after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Caixa Seguridade Participações analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.