Making Sense of Rating Changes for Royalty, Streaming Companies
Franco-Nevada and Silver Wheaton
On March 26, 2017 TD Securities upgraded Franco-Nevada (FNV) from a “hold” to a “buy.” It also raised the stock’s target price from $71 to $83. As reported by the Financial Post, TD analyst Greg Barnes believes that production should grow 16.0% over the next five years.
Barnes wrote in a note, “We have always believed in Franco’s business model, and we believe that at a time when many gold producers are struggling to keep production flat, Franco’s fully funded growth profile sets it apart.” He added, “We also believe that the company will be active again in the medium term, adding new precious metal streams to its profile as mine development activity improves.”
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Credit Suisse (CS) also upgraded FNV from “neutral” to “outperform” on January 13, 2017.
Goldman Sachs (GS) upgraded FNV “neutral” from “sell” on February 9, 2017.
On the same day, Goldman Sachs (GS) downgraded Silver Wheaton (SLW) to “neutral” from “buy.” GS analyst Andrew Quail commented, “We believe the shares are now more fairly valued. The multi-year investment phase has now drawn to a close in our view, and we move to the sidelines. We could be more positive on the name if the company revises its dividend policy to incentivize investors.”
Other royalty and streaming companies
Royal Gold (RGLD) was downgraded by National Bank Financial from “outperform” to “sector perform” on April 20, 2017. BMO Capital Markets reiterated its “buy” rating on the stock with a target price of $88 on March 31, 2017. Previously, in January 2017, CIBC (Canadian Imperial Bank of Commerce) lowered its target price from $90 to $73.
The Royal Bank of Canada reaffirmed its “sector perform” rating on Sandstorm Gold (SAND) stock on April 10, 2017. It has a target price of $7.50 Canadian on the stock. CIBC lowered its target price for SAND stock on January 11, 2017, to $7 Canadian from $8.50 Canadian.