These Analysts Think Pure Gold Mining Inc.'s (CVE:PGM) Sales Are Under Threat

Today is shaping up negative for Pure Gold Mining Inc. (CVE:PGM) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the seven analysts covering Pure Gold Mining are now predicting revenues of CA$127m in 2022. If met, this would reflect a sizeable improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$152m in 2022. It looks like forecasts have become a fair bit less optimistic on Pure Gold Mining, given the measurable cut to revenue estimates.

Check out our latest analysis for Pure Gold Mining

The consensus price target fell 14% to CA$1.15, with the analysts clearly less optimistic about Pure Gold Mining's valuation following this update. 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 Pure Gold Mining analyst has a price target of CA$2.50 per share, while the most pessimistic values it at CA$0.70. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Pure Gold Mining's growth to accelerate, with the forecast 4x annualised growth to the end of 2022 ranking favourably alongside historical growth of 109% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Pure Gold Mining to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Pure Gold Mining next year. They're also forecasting more rapid revenue growth 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. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Pure Gold Mining going forwards.

Want to learn more? At least one of Pure Gold Mining's seven 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.