Multilaser Industrial S.A. (BVMF:MLAS3) Analysts Just Trimmed Their Revenue Forecasts By 21%

Market forces rained on the parade of Multilaser Industrial S.A. (BVMF:MLAS3) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from two analysts covering Multilaser Industrial is for revenues of R$4.2b in 2023, implying a measurable 4.1% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of R$5.3b in 2023. The consensus view seems to have become more pessimistic on Multilaser Industrial, noting the pretty serious reduction to revenue estimates in this update.

See our latest analysis for Multilaser Industrial

The consensus price target fell 17% to R$5.43, with the analysts clearly less optimistic about Multilaser Industrial's valuation following this update. 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 Multilaser Industrial, with the most bullish analyst valuing it at R$9.00 and the most bearish at R$1.50 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Multilaser Industrial's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 4.1% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 21% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Multilaser Industrial is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Multilaser Industrial this year. They're also anticipating slower revenue growth 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. Given the stark change in sentiment, we'd understand if investors became more cautious on Multilaser Industrial after today.

There might be good reason for analyst bearishness towards Multilaser Industrial, like concerns around earnings quality. Learn more, and discover the 2 other risks 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.