One thing we could say about the analysts on Patria Investments Limited (NASDAQ:PAX) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the latest consensus from Patria Investments' seven analysts is for revenues of US$297m in 2023, which would reflect a huge 51% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 99% to US$0.93. Prior to this update, the analysts had been forecasting revenues of US$383m and earnings per share (EPS) of US$1.13 in 2023. Indeed, we can see that the analysts are a lot more bearish about Patria Investments' prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.
Analysts made no major changes to their price target of US$18.52, suggesting the downgrades are not expected to have a long-term impact on Patria Investments' valuation. 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 Patria Investments analyst has a price target of US$21.17 per share, while the most pessimistic values it at US$17.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
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. One thing stands out from these estimates, which is that Patria Investments is forecast to grow faster in the future than it has in the past, with revenues expected to display 39% annualised growth until the end of 2023. If achieved, this would be a much better result than the 8.4% annual decline over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.2% per year. So it looks like Patria Investments is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Patria Investments. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Patria Investments.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Patria Investments, including its declining profit margins. Learn more, and discover the 2 other flags we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here