One Analyst Thinks Andean Precious Metals Corp.'s (CVE:APM) Revenues Are Under Threat

The analyst covering Andean Precious Metals Corp. (CVE:APM) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the latest downgrade, the sole analyst covering Andean Precious Metals provided consensus estimates of US$114m revenue in 2022, which would reflect a definite 10.0% decline on its sales over the past 12 months. Losses are supposed to balloon 297% to US$0.05 per share. Before this latest update, the analyst had been forecasting revenues of US$142m and earnings per share (EPS) of US$0.10 in 2022. So we can see that the consensus has become notably more bearish on Andean Precious Metals' outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Andean Precious Metals

The consensus price target was broadly unchanged at US$1.14, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Andean Precious Metals' past performance and to peers in the same industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2022 compared to the historical decline of 26% per annum over the past year. 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 analyst also expect Andean Precious Metals to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst is expecting Andean Precious Metals to become unprofitable this year. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Andean Precious Metals' revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Andean Precious Metals after the downgrade.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Andean Precious Metals going out as far as 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.