On Tuesday, H.C. Wainwright adjusted its price target for Tanzanian Gold Corp. (NYSE:TRX) shares to $1.40, up from the previous $1.30, while reaffirming a Buy rating. The revision follows the company's announcement of its financial results for the second fiscal quarter of 2024 on Monday.
In the reported quarter, Tanzanian Gold Corp. generated $8.0 million in revenue, resulting in a net income of $1.9 million, equating to $0.00 earnings per share. This performance marks an improvement from the same quarter in the previous fiscal year, where the company saw revenues of $10.1 million and a net loss of $50,000, or $0.00 per share.
The company's cost of sales was reported at $4.7 million, a 9% year-over-year decline, leading to a gross profit of $3.3 million and a gross profit margin of 41%. Despite the profitability, the company acknowledged encountering certain operational challenges during the quarter.
Notably, the existing crushing system reached its capacity limit for crushing sulphide material, which affected the consistency and size of the crushed product before milling.
Looking ahead, Tanzanian Gold Corp. is optimistic about the new expanded crushing circuit, which is expected to resolve the issues encountered with the previous system. Improvements have already been noted following the end of the quarter. The firm also maintains a robust financial position, with approximately $8.0 million in cash reserves.
The price target increase is largely due to updates in the price deck used in the valuation model for Tanzanian Gold Corp., as noted by H.C. Wainwright. The updated target reflects the firm's confidence in the company's operational improvements and financial health.
InvestingPro Insights
Following the positive outlook from H.C. Wainwright on Tanzanian Gold Corp. (NYSE:TRX), InvestingPro data and tips provide further context to the company's financial situation and market performance. With a Price / Book ratio of 2.15 as of the last twelve months ending Q1 2024, the company appears to be valued reasonably in relation to its assets. Moreover, the company has shown a strong return over the last three months, with a 19.01% price total return, signaling investor confidence in its recent performance and future prospects.
Two InvestingPro Tips that stand out for Tanzanian Gold Corp. include the expectation of net income growth this year, which aligns with the company's optimistic financial report and H.C. Wainwright's renewed price target. Additionally, the company holds more cash than debt on its balance sheet, indicating a strong financial position that could support its operational improvements and expansion plans.
Investors interested in a deeper analysis can find more InvestingPro Tips for Tanzanian Gold Corp. at https://www.investing.com/pro/TRX. For those looking to take advantage of the full range of insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are a total of 7 additional InvestingPro Tips available, providing a comprehensive look at the company's financial health and market potential.
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