The latest analyst coverage could presage a bad day for Andean Precious Metals Corp. (CVE:APM), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the solo analyst covering Andean Precious Metals, is for revenues of US$114m in 2022, which would reflect a considerable 10.0% reduction in Andean Precious Metals' sales over the past 12 months. Losses are supposed to balloon 297% to US$0.05 per share. Prior to this update, the analyst had been forecasting revenues of US$142m and earnings per share (EPS) of US$0.10 in 2022. So we can see that the consensus has become notably more bearish on Andean Precious Metals' outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
The consensus price target was broadly unchanged at US$1.14, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would also point out that the forecast 19% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 26% annually over the past year By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. So while a broad number of companies are forecast to grow, unfortunately Andean Precious Metals is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Andean Precious Metals dropped from profits to a loss this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Andean Precious Metals after the downgrade.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2024, which can be seen for 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.
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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.
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