29Metals Limited (ASX:29M) Just Released Its Annual Results And Analysts Are Updating Their Estimates

Last week saw the newest annual earnings release from 29Metals Limited (ASX:29M), an important milestone in the company's journey to build a stronger business. Revenues of AU$450m beat expectations by a respectable 4.3%, although statutory losses per share increased. 29Metals lost AU$0.77, which was 49% more than what the analysts had included in their models. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for 29Metals

After the latest results, the seven analysts covering 29Metals are now predicting revenues of AU$615.1m in 2024. If met, this would reflect a sizeable 37% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 83% to AU$0.11. Before this latest report, the consensus had been expecting revenues of AU$611.5m and AU$0.041 per share in losses. So it's pretty clear the analysts have mixed opinions on 29Metals even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.

The consensus price target held steady at AU$0.53, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic 29Metals analyst has a price target of AU$0.70 per share, while the most pessimistic values it at AU$0.35. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting 29Metals' growth to accelerate, with the forecast 37% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.3% per annum 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 0.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect 29Metals to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at AU$0.53, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on 29Metals. Long-term earnings power is much more important than next year's profits. We have forecasts for 29Metals going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for 29Metals (of which 1 is potentially serious!) you should know about.

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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.