It was a good week Locaweb Internet Service SA (BVMF:LWSA3) shareholders, as the company just announced its latest annual results, with its share price up 3.0% to R$5.83. Overall the results were pretty bad. Sales were in line with expectations at 1.3 billion reais, but statutory losses soared to 0.13 reais per share. This is an important time for investors, as they can track a company’s performance in the report, see what experts predict for next year, and see if there have been any changes to expectations for the business. So we’ve collected the latest post-earnings statutory consensus forecasts to see what’s in store for next year.
Check out our latest analysis for Locaweb Internet Services.
Taking into account the latest results, the current consensus from Locaweb Serviços de Internet’s 7 analysts is for revenue in 2024 of R$1.48b. This reflects a substantial 15% increase in revenue over the last twelve months. Locaweb Serviços de Internet expects to report a statutory profit of R0.13 per share, with earnings expected to improve. However, before the latest results, analysts had been forecasting sales of R$1.47b and earnings per share (EPS) of R$0.14 in 2024. Analysts seem to have become a bit more passive on the business following the latest results. Next year’s earnings per share figure will be slightly lowered.
The consensus price target remains unchanged at 8.08 reais, and analysts seem to believe that the downward revision of the expected profit will not lead to a decline in the stock price in the near term. However, there is another way to think about price targets. The key is to pay attention to the range of price targets offered by analysts. This is because a wide range of estimates can suggest diverse views on possible outcomes for your business. The most optimistic Locaweb Serviços de Internet analyst has a target price of R$11.00 per share, while the most pessimistic values it at R$5.00. Note the wide spread in analyst price targets. This means that there is a fairly wide range of possible scenarios for the underlying business.
Looking at the bigger picture now, one way to understand these forecasts is to see how they compare against both past performance and industry growth estimates. It’s clear that Locaweb Serviços de Internet’s revenue growth is expected to slow significantly, with its revenue expected to grow 15% on an annualized basis to the end of 2024. This compares to a historical growth rate of 31% over the past five years. Let’s compare this to other companies in the industry covered by analysts. These companies are expected to see their revenues (in aggregate) grow by 8.8% per year. Even after the expected slowdown in growth, it’s clear that Locaweb Serviços de Internet is expected to grow faster than the broader industry.
conclusion
The biggest concern is that analysts have cut their earnings per share forecasts, suggesting that Locaweb Serviços de Internet could face business headwinds. Fortunately, there are no major changes to revenue forecasts, and the business is still expected to grow faster than the broader industry. The consensus price target is stable at R$8.08, and the latest estimate is not significant enough to impact the target price.
With that in mind, there’s no need to jump to conclusions about Locaweb Serviços de Internet. Long-term profitability is far more important than next year’s profits. Locaweb Serviços de Internet has made forecasts up to 2025 and is available for free on our platform here.
Remember, there may still be risks. For example, we identified 1 warning sign for Locaweb Internet Services What you need to know.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
