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Gran Colombia Gold Corp. (TSE:GCM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Gran Colombia Gold will make substantially more sales than they'd previously expected. Gran Colombia Gold has also found favour with investors, with the stock up an impressive 15% to US$7.79 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the most recent consensus for Gran Colombia Gold from its three analysts is for revenues of US$389m in 2020 which, if met, would be a meaningful 16% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$350m of revenue in 2020. It looks like there's been a clear increase in optimism around Gran Colombia Gold, given the decent improvement in revenue forecasts.
The consensus price target rose 11% to US$7.92, with the analysts clearly more optimistic about Gran Colombia Gold's prospects 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. There are some variant perceptions on Gran Colombia Gold, with the most bullish analyst valuing it at US$14.09 and the most bearish at US$8.05 per share. 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. We would highlight that Gran Colombia Gold's revenue growth is expected to slow, with forecast 16% increase next year well below the historical 20% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.3% next year. So it's pretty clear that, while Gran Colombia Gold's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Gran Colombia Gold could be worth investigating further.
That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Gran Colombia Gold to be able to reach break-even within the next few years. You can learn more about these forecasts, 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 upgrading 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. 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. Thank you for reading.