Vasta Platform Limited (NASDAQ:VSTA) Just Reported Earnings, And Analysts Cut Their Target Price
Last week saw the newest second-quarter earnings release from Vasta Platform Limited (NASDAQ:VSTA), an important milestone in the company's journey to build a stronger business. It was a pretty good result, with revenues of R$271m, and Vasta Platform came in a solid 12% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Vasta Platform
Taking into account the latest results, the current consensus from Vasta Platform's three analysts is for revenues of R$1.52b in 2023. This would reflect a notable 11% increase on its revenue over the past 12 months. Vasta Platform is also expected to turn profitable, with statutory earnings of R$0.32 per share. Before this earnings announcement, the analysts had been modelling revenues of R$1.45b and losses of R$0.82 per share in 2023. The analysts have definitely been lifting their expectations, with the company expected to reach profitability next year - sooner than expected - thanks to the modest lift to revenue expectations.
Despite these upgrades, the consensus price target fell 7.5% to US$5.06, perhaps signalling that the uplift in performance is not expected to last. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Vasta Platform, with the most bullish analyst valuing it at US$6.08 and the most bearish at US$4.02 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Vasta Platform's growth to accelerate, with the forecast 24% annualised growth to the end of 2023 ranking favourably alongside historical growth of 12% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Vasta Platform is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts now expect Vasta Platform to become profitable next year, compared to previous expectations that it would report a loss. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Vasta Platform's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Vasta Platform. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Vasta Platform analysts - going out to 2025, and you can see them free on our platform here.
You can also see whether Vasta Platform is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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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.
