These Analysts Think Westwing Comércio Varejista S.A.'s (BVMF:WEST3) Sales Are Under Threat

The analysts covering Westwing Comércio Varejista S.A. (BVMF:WEST3) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Surprisingly the share price has been buoyant, rising 11% to R$1.19 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the downgrade, the consensus from three analysts covering Westwing Comércio Varejista is for revenues of R$250m in 2023, implying a considerable 9.1% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing R$283m of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Westwing Comércio Varejista, given the substantial drop in revenue estimates.

Check out our latest analysis for Westwing Comércio Varejista

The consensus price target fell 31% to R$1.65, with the analysts clearly less optimistic about Westwing Comércio Varejista's valuation following this update. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Westwing Comércio Varejista, with the most bullish analyst valuing it at R$2.00 and the most bearish at R$1.30 per share. 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 Westwing Comércio Varejista shareholders.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 7.4% by the end of 2023. This indicates a significant reduction from annual growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.1% annually for the foreseeable future. It's pretty clear that Westwing Comércio Varejista's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Westwing Comércio Varejista next year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Westwing Comércio Varejista's future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Westwing Comércio Varejista after today.

Want to learn more? At least one of Westwing Comércio Varejista's three analysts has provided estimates out to 2025, which can be seen 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.

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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.