Stock Analysis

Analysts Are More Bearish On BR Properties S.A. (BVMF:BRPR3) Than They Used To Be

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Today is shaping up negative for BR Properties S.A. (BVMF:BRPR3) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After this downgrade, BR Properties' four analysts are now forecasting revenues of R$425m in 2022. This would be a sizeable 30% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 29% to R$0.089. Before this latest update, the analysts had been forecasting revenues of R$475m and earnings per share (EPS) of R$0.10 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

View our latest analysis for BR Properties

BOVESPA:BRPR3 Earnings and Revenue Growth April 16th 2022

Despite the cuts to forecast earnings, there was no real change to the R$10.31 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 BR Properties, with the most bullish analyst valuing it at R$15.00 and the most bearish at R$7.50 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that BR Properties' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 30% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 8.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. Not only are BR Properties' revenues expected to improve, it seems that the analysts are also expecting it 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 BR Properties. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of BR Properties.

Still, 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 BR Properties going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether BR Properties is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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BR Properties

BR Properties is one of the leading high-income commercial real estate investment companies in Brazil, focused on the acquisition, leasing, management, development and sale of commercial real estate, including office buildings and industrial and logistics warehouses, located in the main metropolitan regions from Brazil.

Slightly overvalued with imperfect balance sheet.