Westwing Comércio Varejista S.A. (BVMF:WEST3) Analysts Just Slashed Next Year's Revenue Estimates By 16%

Today is shaping up negative for Westwing Comércio Varejista S.A. (BVMF:WEST3) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After this downgrade, Westwing Comércio Varejista's three analysts are now forecasting revenues of R$373m in 2022. This would be a sizeable 23% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing R$444m of revenue in 2022. The consensus view seems to have become more pessimistic on Westwing Comércio Varejista, noting the substantial drop in revenue estimates in this update.

See our latest analysis for Westwing Comércio Varejista

Notably, the analysts have cut their price target 32% to R$6.57, suggesting concerns around Westwing Comércio Varejista's valuation. 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 Westwing Comércio Varejista at R$7.00 per share, while the most bearish prices it at R$6.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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. It's pretty clear that there is an expectation that Westwing Comércio Varejista's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 18% growth on an annualised basis. This is compared to a historical growth rate of 34% over the past three years. Compare this to the 6 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it looks like Westwing Comércio Varejista is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for next year. Analysts also expect revenues to grow approximately in line with 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 more information? At least one of Westwing Comércio Varejista's three analysts has provided estimates out to 2024, 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.