Yahoo Finance Steppe Gold Ltd. (TSE:STGO) Analysts Just Slashed This Year's Revenue Estimates By 26%
The latest analyst coverage could presage a bad day for Steppe Gold Ltd. (TSE:STGO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, the current consensus, from the three analysts covering Steppe Gold, is for revenues of US$37m in 2021, which would reflect an uncomfortable 18% reduction in Steppe Gold's sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$50m in 2021. The consensus view seems to have become more pessimistic on Steppe Gold, noting the pretty serious reduction to revenue estimates in this update.
Check out our latest analysis for Steppe Gold
The consensus price target fell 15% to CA$3.32, with the analysts clearly less optimistic about Steppe Gold's valuation following this update. 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. The most optimistic Steppe Gold analyst has a price target of CA$4.50 per share, while the most pessimistic values it at CA$1.75. 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.
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 32% by the end of 2021. This indicates a significant reduction from annual growth of 130% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Steppe Gold is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Steppe Gold this year. They're also anticipating slower revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Steppe Gold after today.
Want more information? At least one of Steppe Gold's three analysts has provided estimates out to 2023, 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.
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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