Analysts Have Just Cut Their Auren Energia S.A. (BVMF:AURE3) Revenue Estimates By 10%

Market forces rained on the parade of Auren Energia S.A. (BVMF:AURE3) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the seven analysts covering Auren Energia, is for revenues of R$2.4b in 2022, which would reflect a disturbing 38% reduction in Auren Energia's sales over the past 12 months. Per-share earnings are expected to jump 584% to R$0.60. Before this latest update, the analysts had been forecasting revenues of R$2.7b and earnings per share (EPS) of R$0.61 in 2022. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.

View our latest analysis for Auren Energia

The average price target was steady at R$18.83 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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. The most optimistic Auren Energia analyst has a price target of R$22.00 per share, while the most pessimistic values it at R$17.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 61% by the end of 2022. This indicates a significant reduction from annual growth of 62% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.0% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Auren Energia is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Auren Energia after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Auren Energia analysts - going out to 2024, 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.