One thing we could say about the analysts on Pretium Resources Inc. (TSE:PVG) – they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, Pretium Resources' four analysts currently expect revenues in 2021 to be US$646m, approximately in line with the last 12 months. Before the latest update, the analysts were foreseeing US$729m of revenue in 2021. The consensus view seems to have become more pessimistic on Pretium Resources, noting the substantial drop in revenue estimates in this update.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Pretium Resources' revenue growth is expected to slow, with the forecast 2.6% annualised growth rate until the end of 2021 being well below the historical 19% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Pretium Resources.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Pretium Resources this year. They also expect company revenue to perform worse than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Pretium Resources after today.
Want to learn more? At least one of Pretium Resources' four analysts has provided estimates out to 2025, which can be seen 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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