Last Update 25 Jan 26

Fair value Increased 13%

GROY: Equity Raise And Lockup Will Support Future Multiple Expansion

Analysts have raised their price target on Gold Royalty by approximately $0.64 to $5.75, citing updated assumptions on fair value, discount rate, revenue growth, profit margins and future P/E that incorporate recent research views, which they describe as mixed but generally constructive.

Analyst Commentary

Recent research on Gold Royalty has been mixed, with some analysts lifting their price targets and others turning more cautious on the shares. This split view gives you a sense of the key debates around valuation, execution and growth potential.

Bullish Takeaways

Bullish analysts see room for upside in the equity story and have responded by lifting their price targets, which feeds into the higher blended target of US$5.75.
They point to updated assumptions on revenue growth and profit margins that, in their view, better reflect the company’s potential earnings power over time.
Some optimistic research uses a P/E framework that assumes the market will be willing to pay a higher multiple if the company meets its growth and profitability goals.
Supportive views tend to treat recent research updates as constructive overall. These views suggest that execution against current plans could justify the revised fair value estimates.

Bearish Takeaways

Bearish analysts have taken a more cautious stance and, in at least one case, moved to a lower rating on the shares, signaling concern about the current valuation.
This group questions how quickly the company can translate its portfolio into consistent revenue growth and margin performance that matches more optimistic forecasts.
They are more conservative on what future P/E multiples the market might be willing to assign, particularly if there are execution hiccups or slower than expected growth.
Cautious views frame the recent research as mixed. These views highlight that while price targets have been raised in some cases, risks around earnings delivery and valuation remain in focus.

What’s in the News

Gold Royalty completed a US$90 million follow on equity offering of 22,500,000 common shares at US$4.00 per share, with a US$0.18 discount per share (Key Developments).
The company filed a follow on equity offering for its common shares ahead of the completed US$90 million raise (Key Developments).
National Bank Financial, Inc. is no longer a co lead underwriter on Gold Royalty’s US$70 million follow on equity offering (Key Developments).
National Bank of Canada Financial Markets was added as a co lead underwriter on the same US$70 million follow on equity offering (Key Developments).
Lock up agreements cover 197,490,625 common shares, certain options, warrants and restricted share units. The lock up runs from 11 Dec 2025 to 12 Mar 2026 and applies to directors and officers who agreed not to sell or otherwise dispose of common shares during that period (Key Developments).

Valuation Changes

Fair Value was raised from US$5.11 to US$5.75, reflecting a higher updated estimate per share.
The Discount Rate was adjusted slightly from 7.77% to 7.76%, a marginal change in the rate used for valuation.
Revenue Growth was revised from 77.14% to 68.52%, indicating a lower growth assumption in the model.
The Net Profit Margin was reduced from 49.42% to 40.89%, pointing to a more conservative profitability assumption.
The Future P/E increased from 29.61x to 46.77x, implying a higher multiple assumption for potential future earnings.

Recent production ramps and strong gold demand drive robust revenue, cash flow, and profit margin expansion as more assets reach full operation.
Sector consolidation and a pipeline of mature projects position the company for higher institutional interest, cost synergies, and enhanced shareholder returns.
Heavy reliance on a few assets, exposure to gold price volatility, shareholder dilution risk, rising acquisition costs, and geopolitical uncertainties challenge growth and revenue stability.

Catalysts

About Gold Royalty

A precious metals-focused royalty company, provides financing solutions to the metals and mining industry.What are the underlying business or industry changes driving this perspective?

Multiple large, long-life mines in the portfolio have recently ramped up or are nearing commercial production (Côté, Borborema, Vareš), positioning Gold Royalty for a multiyear period of significant attributable gold production growth, directly supporting robust revenue increases and operating cash flow.
Persistently high gold prices and ongoing strong demand for gold as a safe haven amid global monetary debasement and geopolitical uncertainty should continue to enhance royalty revenues and increase EBITDA, especially as more assets reach steady-state operations.
The high fixed-cost structure of the business and increasing scale from newly producing royalties will result in meaningful operating leverage, translating incremental top-line growth into disproportionately higher net margins and improving overall profitability.
Anticipated sector consolidation, combined with Gold Royalty's drive to deleverage and its emerging status as a future consolidator, enhances the company's ability to create and realize cost synergies, attract institutional capital, and unlock further upside in earnings and valuation multiples.
Pipeline of mature and brownfield projects, mainly with experienced and well-capitalized operators in attractive jurisdictions, underpins stable, recurring cash flow increases and supports future capital returns to shareholders, strengthening long-term per-share earnings growth.

Gold Royalty Earnings and Revenue Growth

Gold Royalty Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Gold Royalty's revenue will grow by 55.5% annually over the next 3 years.
Analysts assume that profit margins will increase from -14.9% today to 31.6% in 3 years time.
Analysts expect earnings to reach $14.7 million (and earnings per share of $0.05) by about August 2028, up from $-1.8 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 56.8x on those 2028 earnings, up from -311.5x today. This future PE is greater than the current PE for the US Metals and Mining industry at 23.3x.
Analysts expect the number of shares outstanding to grow by 0.82% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.09%, as per the Simply Wall St company report.

Gold Royalty Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Heavy dependence on ramping up production at a small number of key assets (such as Côté, Vareš, and Borborema) creates concentration risk-operational or regulatory setbacks at any of these mines could materially impact revenue and delay growth in earnings.
Gold Royalty's plans to deleverage and return capital to shareholders hinge on persistently strong gold prices and timely ramp-ups; a sustained pullback in gold prices or delays in production ramp could erode free cash flow, compress net margins, and challenge future dividend potential.
With approximately 20 million in-the-money warrants outstanding and ongoing reliance on share issuances to fund growth, there is a risk of continued shareholder dilution, potentially suppressing per-share earnings growth and limiting share price appreciation.
Intensifying competition and ongoing sector consolidation may bid up the cost of new royalty acquisitions, leading to lower future yields on new deals, shrinking return on invested capital, and pressuring long-term profit margins.
While the portfolio is primarily focused on stable jurisdictions, forays into international markets (e.g., Brazil and potentially Africa) expose the company to heightened geopolitical, regulatory, and resource nationalism risks, which could jeopardize future royalty streams and impair revenue stability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $3.908 for Gold Royalty based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $6.25, and the most bearish reporting a price target of just $3.25.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $46.6 million, earnings will come to $14.7 million, and it would be trading on a PE ratio of 56.8x, assuming you use a discount rate of 7.1%.
Given the current share price of $3.37, the analyst price target of $3.91 is 13.8% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

GROY: Cash Flow Expansion Will Be Driven By Higher Gold Output