Market forces rained on the parade of Lavoro Limited (NASDAQ:LVRO) 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 downgrade, the consensus from twin analysts covering Lavoro is for revenues of R$9.2b in 2025, implying a discernible 2.5% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of R$12b in 2025. It looks like forecasts have become a fair bit less optimistic on Lavoro, given the pretty serious reduction to revenue estimates.

See our latest analysis for Lavoro

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 2.5% by the end of 2025. This indicates a significant reduction from annual growth of 15% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Lavoro is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Lavoro after today.

That said, the analysts might have good reason to be negative on Lavoro, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other risk we've identified.

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 with high insider ownership.

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.