Broker Revenue Forecasts For Auren Energia S.A. (BVMF:AURE3) Are Surging Higher

Auren Energia S.A. (BVMF:AURE3) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The revenue forecast for next year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. The market seems to be pricing in some improvement in the business too, with the stock up 6.1% over the past week, closing at R$15.05. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the consensus from nine analysts covering Auren Energia is for revenues of R$3.4b in 2023, implying a painful 28% decline in sales compared to the last 12 months. Per-share earnings are expected to shoot up 253% to R$0.83. Prior to this update, the analysts had been forecasting revenues of R$3.0b and earnings per share (EPS) of R$0.84 in 2023. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.

Check out our latest analysis for Auren Energia

It may not be a surprise to see that the analysts have reconfirmed their price target of R$18.40, implying that the uplift in sales is not expected to greatly contribute to Auren Energia's valuation in the near term. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Auren Energia analyst has a price target of R$22.00 per share, while the most pessimistic values it at R$15.70. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Auren Energia's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 23% by the end of 2023. This indicates a significant reduction from annual growth of 29% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.3% annually for the foreseeable future. It's pretty clear that Auren Energia's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at Auren Energia.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Auren Energia 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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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.