News Flash: Analysts Just Made A Notable Upgrade To Their Neoenergia S.A. (BVMF:NEOE3) Forecasts

Neoenergia S.A. (BVMF:NEOE3) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Neoenergia will make substantially more sales than they'd previously expected.

Following the upgrade, the latest consensus from Neoenergia's five analysts is for revenues of R$45b in 2022, which would reflect an okay 4.8% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to tumble 26% to R$2.39 in the same period. Prior to this update, the analysts had been forecasting revenues of R$39b and earnings per share (EPS) of R$2.26 in 2022. The most recent forecasts are noticeably more optimistic, with a decent improvement in revenue estimates and a lift to earnings per share as well.

View our latest analysis for Neoenergia

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of R$25.55, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. There are some variant perceptions on Neoenergia, with the most bullish analyst valuing it at R$29.00 and the most bearish at R$23.30 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Neoenergia's revenue growth is expected to slow, with the forecast 4.8% annualised growth rate until the end of 2022 being well below the historical 18% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.5% per year. Even after the forecast slowdown in growth, it seems obvious that Neoenergia is also expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Neoenergia.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential concern with Neoenergia, including concerns around earnings quality. You can learn more, and discover the 1 other concern 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 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.