On Wednesday, H.C. Wainwright adjusted its price target on shares of Gold Royalty Corp. (NYSE:GROY) to $5.50 from the previous $5.75, while maintaining a Buy rating on the stock. The revision follows Gold Royalty Corp.'s announcement of its third-quarter financial results for fiscal year 2024 on November 4.
Gold Royalty reported significant growth with $2.1 million in revenue for the quarter, leading to a net income of $3.4 million, or $0.02 per share. These results show a marked improvement over the same quarter of the previous year, which saw $0.8 million in revenue and a net loss of $1.8 million, or ($0.01) per share.
The company's revenue increase is largely due to new royalty income from the Côté and Borborema projects, as well as continued earnings from existing royalties at the Canadian Malartic, Cozamin, and Borden Mines. Notably, Gold Royalty's net income for the quarter surpassed its revenue, which is attributed to a deferred tax recovery of $5.9 million, a significant rise from $0.5 million in the third quarter of 2023.
However, the company also faced higher finance costs totaling $2.2 million, compared to $0.4 million in the same period last year. These costs were primarily related to interest expenses on bank loans and convertible debentures.
Looking forward, H.C. Wainwright anticipates further revenue growth for Gold Royalty in the fourth quarter of 2024. This expectation is based on robust gold pricing and the projection that the Vares and Côté Gold Mines will reach full production capacity by the end of the year. The firm reaffirms its Buy rating while adjusting the price target slightly downward.
In other recent news, Gold Royalty's management team, led by Chairman and CEO David Garofalo, has expressed confidence in the company's growth prospects, highlighting the expectation of positive free cash flow soon. Notably, the company's largest shareholder recently doubled their ownership to about 11%.
These are among the recent developments for Gold Royalty Corp.
InvestingPro Insights
Gold Royalty Corp.'s (NYSE:GROY) financial landscape presents a mixed picture, as revealed by recent InvestingPro data. The company's revenue growth is particularly noteworthy, with a staggering 197.02% increase over the last twelve months as of Q3 2024, aligning with the significant growth reported in the article. This impressive growth is further supported by an InvestingPro Tip indicating that analysts anticipate continued sales growth in the current year.
However, investors should be cautious. Another InvestingPro Tip warns that the company is quickly burning through cash, which could be a concern given the higher finance costs mentioned in the article. Additionally, with a P/E Ratio (Adjusted) of -302.48, the company's profitability remains a challenge, corroborating the InvestingPro Tip that analysts do not anticipate the company will be profitable this year.
Despite these challenges, Gold Royalty's Price to Book ratio of 0.43 suggests the stock might be undervalued, potentially supporting H.C. Wainwright's Buy rating. For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Gold Royalty's financial health and future prospects.
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