These Analysts Just Made A Huge Downgrade To Their Westwing Comércio Varejista S.A. (BVMF:WEST3) EPS Forecasts

One thing we could say about the analysts on Westwing Comércio Varejista S.A. (BVMF:WEST3) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After this downgrade, Westwing Comércio Varejista's three analysts are now forecasting revenues of R$444m in 2022. This would be a major 46% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 53% to R$0.13. Yet prior to the latest estimates, the analysts had been forecasting revenues of R$536m and losses of R$0.049 per share in 2022. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Westwing Comércio Varejista

The consensus price target fell 36% to R$9.67, implicitly signalling that lower earnings per share are a leading indicator for Westwing Comércio Varejista's 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. Currently, the most bullish analyst values Westwing Comércio Varejista at R$16.00 per share, while the most bearish prices it at R$6.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Westwing Comércio Varejista'shistorical trends, as the 35% annualised revenue growth to the end of 2022 is roughly in line with the 34% annual revenue growth over the past three years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 20% annually. So it's pretty clear that Westwing Comércio Varejista is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

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 Westwing Comércio Varejista going out to 2023, 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.

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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.