Newsflash: Movida Participações S.A. (BVMF:MOVI3) Analysts Have Been Trimming Their Revenue Forecasts

The analysts covering Movida Participações S.A. (BVMF:MOVI3) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory 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.

After this downgrade, Movida Participações' ten analysts are now forecasting revenues of R$10b in 2023. This would be a reasonable 7.0% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing R$13b of revenue in 2023. The consensus view seems to have become more pessimistic on Movida Participações, noting the sizeable cut to revenue estimates in this update.

View our latest analysis for Movida Participações

We'd point out that there was no major changes to their price target of R$15.25, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Movida Participações at R$29.50 per share, while the most bearish prices it at R$6.50. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Movida Participações' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 7.0% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 25% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Movida Participações.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Movida Participações this year. They're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Movida Participações going forwards.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Movida Participações' business, like its declining profit margins. Learn more, and discover the 3 other flags 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.

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