What You Need To Know About The GoGold Resources Inc. (TSE:GGD) Analyst Downgrade Today

Today is shaping up negative for GoGold Resources Inc. (TSE:GGD) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 5.9% to CA$2.87 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the latest downgrade, the current consensus, from the four analysts covering GoGold Resources, is for revenues of US$44m in 2022, which would reflect a chunky 16% reduction in GoGold Resources' sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$55m in 2022. The consensus view seems to have become more pessimistic on GoGold Resources, noting the measurable cut to revenue estimates in this update.

View our latest analysis for GoGold Resources

We'd point out that there was no major changes to their price target of CA$4.66, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. The most optimistic GoGold Resources analyst has a price target of CA$5.05 per share, while the most pessimistic values it at CA$4.30. This is a very narrow spread of estimates, implying either that GoGold Resources is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the GoGold Resources' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 21% by the end of 2022. This indicates a significant reduction from annual growth of 28% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.5% annually for the foreseeable future. It's pretty clear that GoGold Resources' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for GoGold Resources this year. They also expect company revenue to perform worse than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of GoGold Resources going forwards.

Still got questions? At least one of GoGold Resources' four analysts has provided estimates out to 2024, 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.

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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.