It’s been a pretty great week for Pan American Silver Corp. (TSE:PAAS) shareholders, with its shares surging 12% to CA$27.86 in the week since its latest first-quarter results. It looks like the results were pretty good overall. While revenues of US$601m were in line with analyst predictions, statutory losses were much smaller than expected, with Pan American Silver losing US$0.08 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Pan American Silver
After the latest results, the four analysts covering Pan American Silver are now predicting revenues of US$2.71b in 2024. If met, this would reflect a credible 7.4% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Pan American Silver forecast to report a statutory profit of US$0.45 per share. Before this earnings report, the analysts had been forecasting revenues of US$2.71b and earnings per share (EPS) of US$0.17 in 2024. Although the revenue estimates have not really changed, we can see there’s been a very substantial lift in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target was unchanged at CA$32.23, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values Pan American Silver at CA$34.38 per share, while the most bearish prices it at CA$30.09. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Pan American Silver’s past performance and to peers in the same industry. We would highlight that Pan American Silver’s revenue growth is expected to slow, with the forecast 9.9% annualised growth rate until the end of 2024 being well below the historical 14% 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 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 Pan American Silver.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Pan American Silver following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CA$32.23, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for Pan American Silver going out to 2025, and you can see them free on our platform here.
We don’t want to rain on the parade too much, but we did also find 1 warning sign for Pan American Silver that you need to be mindful of.
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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.