The analysts covering Anaconda Mining Inc. (TSE:ANX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After the downgrade, the three analysts covering Anaconda Mining are now predicting revenues of CA$30m in 2022. If met, this would reflect an okay 3.7% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$41m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Anaconda Mining, given the pretty serious reduction to revenue estimates.
There was no particular change to the consensus price target of CA$1.49, with Anaconda Mining's latest outlook seemingly not enough to result in a change of 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. Currently, the most bullish analyst values Anaconda Mining at CA$2.00 per share, while the most bearish prices it at CA$1.05. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. It's clear from the latest estimates that Anaconda Mining's rate of growth is expected to accelerate meaningfully, with the forecast 4.9% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.6% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. So it's clear that despite the acceleration in growth, Anaconda Mining is expected to grow meaningfully slower than the industry average.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Anaconda Mining this year. They also expect company revenue to perform worse than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Anaconda Mining going forwards.
Of course, this isn't the full story. At least one of Anaconda Mining's three analysts has provided estimates 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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