The latest analyst coverage could presage a bad day for Alamos Gold Inc. (TSE:AGI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. The stock price has risen 4.7% to CA$33.07 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the most recent consensus for Alamos Gold from its five analysts is for revenues of US$1.7b in 2025 which, if met, would be a major 23% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 79% to US$1.21. Before this latest update, the analysts had been forecasting revenues of US$1.9b and earnings per share (EPS) of US$1.54 in 2025. Indeed, we can see that the analysts are a lot more bearish about Alamos Gold's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Alamos Gold

Despite the cuts to forecast earnings, there was no real change to the US$27.62 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Alamos Gold, with the most bullish analyst valuing it at US$32.38 and the most bearish at US$24.46 per share. This is a very narrow spread of estimates, implying either that Alamos Gold is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alamos Gold's past performance and to peers in the same industry. The analysts are definitely expecting Alamos Gold's growth to accelerate, with the forecast 23% annualised growth to the end of 2025 ranking favourably alongside historical growth of 12% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Alamos Gold to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Alamos Gold. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 Alamos Gold after the downgrade.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Alamos Gold could now be moderately overvalued. You can learn more about our valuation methodology for free on our platform here.

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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.