There's been a notable change in appetite for Geodrill Limited (TSE:GEO) shares in the week since its yearly report, with the stock down 11% to CA$1.71. Revenues were US$87m, with Geodrill reporting some -5.6% below analyst expectations. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Geodrill after the latest results.
After the latest results, the four analysts covering Geodrill are now predicting revenues of US$93.5m in 2020. If met, this would reflect a satisfactory 6.9% improvement in sales compared to the last 12 months. Before this earnings result, analysts had predicted US$100.9m revenue in 2020, although there was no accompanying EPS estimate. It looks like analysts have become a bit less bullish on Geodrill, given the revenue estimates after the latest results.
There's been no real change to the consensus price target of US$2.14, with Geodrillseemingly executing in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Geodrill at US$2.44 per share, while the most bearish prices it at US$2.02. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
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. We would highlight that Geodrill's revenue growth is expected to slow, with forecast 6.9% increase next year well below the historical 16%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.0% next year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Geodrill to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away from these updates is that analysts are definitely optimistic on the business, given that they've begun forecasting positive per-share earnings for next year. Analysts also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The consensus price target held steady at US$2.14, with the latest estimates not enough to have an impact on analysts' estimated valuations.
At least one of Geodrill's four analysts has provided estimates out to 2021, which can be seen for free on our platform here.
We also provide an overview of the Geodrill Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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