What Does The Future Hold For Blau Farmacêutica S.A. (BVMF:BLAU3)? These Analysts Have Been Cutting Their Estimates

The analysts covering Blau Farmacêutica S.A. (BVMF:BLAU3) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Bidders are definitely seeing a different story, with the stock price of R$20.73 reflecting a 14% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the current consensus from Blau Farmacêutica's six analysts is for revenues of R$1.6b in 2023 which - if met - would reflect a meaningful 18% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing R$1.8b of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Blau Farmacêutica, given the measurable cut to revenue estimates.

View our latest analysis for Blau Farmacêutica

We'd point out that there was no major changes to their price target of R$32.36, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Blau Farmacêutica at R$40.00 per share, while the most bearish prices it at R$25.00. 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 Blau Farmacêutica shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Blau Farmacêutica's past performance and to peers in the same industry. The analysts are definitely expecting Blau Farmacêutica's growth to accelerate, with the forecast 25% annualised growth to the end of 2023 ranking favourably alongside historical growth of 16% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Blau Farmacêutica to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Blau Farmacêutica going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Blau Farmacêutica's financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 1 other concern we've identified.

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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.