Stock Analysis

Analysts Have Lowered Expectations For Brisanet Participações S.A. (BVMF:BRIT3) After Its Latest Results

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Shareholders of Brisanet Participações S.A. (BVMF:BRIT3) will be pleased this week, given that the stock price is up 19% to R$4.20 following its latest yearly results. It was an okay report, and revenues came in at R$1.2b, approximately in line with analyst estimates leading up to the results announcement. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Brisanet Participações

BOVESPA:BRIT3 Earnings and Revenue Growth March 24th 2024

Taking into account the latest results, the consensus forecast from Brisanet Participações' four analysts is for revenues of R$1.43b in 2024. This reflects a notable 17% improvement in revenue compared to the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of R$1.52b and earnings per share (EPS) of R$0.33 in 2024. Overall, while there's been a small dip in revenue estimates, the consensus now no longer provides an EPS estimate. This implies that the market believes revenue is more important following the latest results.

We'd also point out that thatthe analysts have made no major changes to their price target of R$6.16. 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. There are some variant perceptions on Brisanet Participações, with the most bullish analyst valuing it at R$17.00 and the most bearish at R$3.60 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. We would highlight that Brisanet Participações' revenue growth is expected to slow, with the forecast 17% annualised growth rate until the end of 2024 being well below the historical 29% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.5% per year. Even after the forecast slowdown in growth, it seems obvious that Brisanet Participações is also expected to grow faster than the wider industry.

The Bottom Line

The clear low-light was that the analysts cut their forecast revenue estimates for Brisanet Participações next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at R$6.16, with the latest estimates not enough to have an impact on their price targets.

At least one of Brisanet Participações' four analysts has provided estimates out to 2025, which can be seen for free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Brisanet Participações (of which 1 is a bit concerning!) you should know about.

Valuation is complex, but we're helping make it simple.

Find out whether Brisanet Participações is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.