One thing we could say about the analysts on Lavvi Empreendimentos Imobiliários S.A. (BVMF:LAVV3) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the downgrade, the latest consensus from Lavvi Empreendimentos Imobiliários' twin analysts is for revenues of R$821m in 2022, which would reflect a major 21% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be R$0.97, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of R$926m and earnings per share (EPS) of R$1.05 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.
It'll come as no surprise then, to learn that the analysts have cut their price target 5.3% to R$12.00. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Lavvi Empreendimentos Imobiliários analyst has a price target of R$15.70 per share, while the most pessimistic values it at R$10.00. 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 Lavvi Empreendimentos Imobiliários shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Lavvi Empreendimentos Imobiliários' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 65% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. So it's pretty clear that, while Lavvi Empreendimentos Imobiliários' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Lavvi Empreendimentos Imobiliários going forwards.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Lavvi Empreendimentos Imobiliários, including concerns around earnings quality. Learn more, and discover the 1 other warning sign we've identified, for 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.
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.