What Does The Future Hold For Ero Copper Corp. (TSE:ERO)? These Analysts Have Been Cutting Their Estimates

Today is shaping up negative for Ero Copper Corp. (TSE:ERO) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Shares are up 7.4% to CA$20.50 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After this downgrade, Ero Copper's eleven analysts are now forecasting revenues of US$849m in 2025. This would be a major 83% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$931m in 2025. It looks like the analysts have become a bit less bullish on Ero Copper, given the slight decrease in revenue estimates after the latest consensus updates.

See our latest analysis for Ero Copper

Notably, the analysts have cut their price target 7.8% to CA$27.59, suggesting concerns around Ero Copper's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Ero Copper's rate of growth is expected to accelerate meaningfully, with the forecast 62% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 8.7% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Ero Copper is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for next year. They're also forecasting more rapid revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Ero Copper after today.

That said, the analysts might have good reason to be negative on Ero Copper, given concerns around earnings quality. Learn more, and discover the 2 other flags we've identified, for free on our platform here.

We also provide an overview of the Ero Copper Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.