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Some Analysts Just Cut Their Adecoagro S.A. (NYSE:AGRO) Estimates

Simply Wall St
·3 min read

Market forces rained on the parade of Adecoagro S.A. (NYSE:AGRO) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the seven analysts covering Adecoagro provided consensus estimates of US$752m revenue in 2020, which would reflect a chunky 15% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$977m in 2020. The consensus view seems to have become more pessimistic on Adecoagro, noting the sizeable cut to revenue estimates in this update.

See our latest analysis for Adecoagro

NYSE:AGRO Past and Future Earnings April 1st 2020
NYSE:AGRO Past and Future Earnings April 1st 2020

Notably, the analysts have cut their price target 7.1% to US$8.35, suggesting concerns around Adecoagro's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Adecoagro analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$4.90. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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 sales are expected to reverse, with the forecast 15% revenue decline a notable change from historical growth of 4.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.3% annually for the foreseeable future. It's pretty clear that Adecoagro's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Adecoagro this year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Adecoagro's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Adecoagro going forwards.

Need some more information? We have estimates for Adecoagro from its seven analysts out until 2022, 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.