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Need To Know: Analysts Are Much More Bullish On Cosan Limited (NYSE:CZZ) Revenues

Simply Wall St

Celebrations may be in order for Cosan Limited (NYSE:CZZ) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

After the upgrade, the four analysts covering Cosan are now predicting revenues of R$69b in 2020. If met, this would reflect a huge 235% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 55% to R$8.87. Previously, the analysts had been modelling revenues of R$57b and earnings per share (EPS) of R$8.70 in 2020. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for Cosan

NYSE:CZZ Past and Future Earnings April 25th 2020
NYSE:CZZ Past and Future Earnings April 25th 2020

It may not be a surprise to see that the analysts have reconfirmed their price target of US$17.94, implying that the uplift in sales is not expected to greatly contribute to Cosan's valuation in the near term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Cosan at US$24.00 per share, while the most bearish prices it at US$11.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Cosan'sgrowth to accelerate, with the forecast 235% growth ranking favourably alongside historical growth of 14% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 1.3% per year. So it's clear with the acceleration in growth, Cosan is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Cosan.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Cosan analysts - going out to 2022, and you can see them free on our platform here.

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

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.