Bullish: Analysts Just Made A Massive Upgrade To Their Sequoia Logística e Transportes S.A. (BVMF:SEQL3) Forecasts

Shareholders in Sequoia Logística e Transportes S.A. (BVMF:SEQL3) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 5.9% over the past week, closing at R$30.29. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

After the upgrade, the three analysts covering Sequoia Logística e Transportes are now predicting revenues of R$1.6b in 2021. If met, this would reflect a huge 103% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of R$0.75 per share next year. Before this latest update, the analysts had been forecasting revenues of R$1.4b and earnings per share (EPS) of R$0.54 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Sequoia Logística e Transportes

It will come as no surprise to learn that the analysts have increased their price target for Sequoia Logística e Transportes 42% to R$32.00 on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Sequoia Logística e Transportes at R$38.00 per share, while the most bearish prices it at R$21.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. The analysts are definitely expecting Sequoia Logística e Transportes' growth to accelerate, with the forecast 103% growth ranking favourably alongside historical growth of 30% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.8% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sequoia Logística e Transportes is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Sequoia Logística e Transportes.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Sequoia Logística e Transportes analysts - going out to 2025, and you can see them 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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