Analysts Have Just Cut Their Centerra Gold Inc. (TSE:CG) Revenue Estimates By 22%

The analysts covering Centerra Gold Inc. (TSE:CG) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Centerra Gold's six analysts is for revenues of US$847m in 2022, which would reflect an uncomfortable 13% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of US$1.1b in 2022. The consensus view seems to have become more pessimistic on Centerra Gold, noting the pretty serious reduction to revenue estimates in this update.

See our latest analysis for Centerra Gold

The consensus price target fell 12% to US$8.39, with the analysts clearly less optimistic about Centerra Gold's valuation following this update. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Centerra Gold, with the most bullish analyst valuing it at US$15.08 and the most bearish at US$8.14 per share. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One more thing stood out to us about these estimates, and it's the idea that Centerra Gold's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 24% to the end of 2022. This tops off a historical decline of 7.2% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 12% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Centerra Gold to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse 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. Given the stark change in sentiment, we'd understand if investors became more cautious on Centerra Gold after today.

Looking for more information? We have estimates for Centerra Gold from its six analysts out until 2024, and you can see them 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.