Telefônica Brasil S.A. (BVMF:VIVT3) Just Released Its Full-Year Results And Analysts Are Updating Their Estimates

Telefônica Brasil S.A. (BVMF:VIVT3) shareholders are probably feeling a little disappointed, since its shares fell 5.3% to R$44.00 in the week after its latest full-year results. Results were roughly in line with estimates, with revenues of R$43b and statutory earnings per share of R$2.82. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Telefônica Brasil

Following the latest results, Telefônica Brasil's eleven analysts are now forecasting revenues of R$44.3b in 2021. This would be an okay 2.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 11% to R$3.13. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$44.3b and earnings per share (EPS) of R$2.97 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of R$59.81, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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 Telefônica Brasil at R$64.50 per share, while the most bearish prices it at R$56.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Telefônica Brasil's past performance and to peers in the same industry. It's clear from the latest estimates that Telefônica Brasil's rate of growth is expected to accelerate meaningfully, with the forecast 2.8% revenue growth noticeably faster than its historical growth of 1.1%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 7.0% next year. So it's clear that despite the acceleration in growth, Telefônica Brasil is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Telefônica Brasil's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Telefônica Brasil's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Telefônica Brasil going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Telefônica Brasil that you should be aware of.

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