Wesdome Gold Mines Ltd. (TSE:WDO) Analysts Just Slashed This Year's Revenue Estimates By 17%

One thing we could say about the analysts on Wesdome Gold Mines Ltd. (TSE:WDO) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After this downgrade, Wesdome Gold Mines' seven analysts are now forecasting revenues of CA$289m in 2022. This would be a credible 2.4% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$346m in 2022. The consensus view seems to have become more pessimistic on Wesdome Gold Mines, noting the substantial drop in revenue estimates in this update.

View our latest analysis for Wesdome Gold Mines

Notably, the analysts have cut their price target 6.2% to CA$13.73, suggesting concerns around Wesdome Gold Mines' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Wesdome Gold Mines at CA$17.50 per share, while the most bearish prices it at CA$9.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. It's pretty clear that there is an expectation that Wesdome Gold Mines' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 4.9% growth on an annualised basis. This is compared to a historical growth rate of 23% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Wesdome Gold Mines.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Wesdome Gold Mines 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 Wesdome Gold Mines after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Wesdome Gold Mines' financials, such as its declining profit margins. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.