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Has Iamgold Pulled off a Lasting Turnaround?

PART:
1 2 3 4 5
Part 4
Has Iamgold Pulled off a Lasting Turnaround? PART 4 OF 5

Why Analysts Are so Bullish on Iamgold after Its Latest Announcement

IAG’s rating versus peers

Iamgold (IAG) has “buy” ratings from 62% of the analysts covering the stock, compared with Agnico Eagle Mines’ (AEM), Eldorado Gold’s (EGO), Yamana Gold’s (AUY), and New Gold’s (NGD) percentages of 56%, 54%, 38% and 15% “buy” recommendations, respectively.

Why Analysts Are so Bullish on Iamgold after Its Latest Announcement

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CIBC’s upgrade

CIBC upgraded Iamgold (IAG) to “outperform” on September 6, 2017, after the company reported its latest significant gold discovery. The firm had been “neutral” on IAG stock since December 2016. CIBC also raised IAG’s target price from $6.5 to $8.5.

CIBC analyst David Haughton stated: “The new Saramacca resourse is a ‘game-changer’ to drive lower costs and better valuation at Rosebel.”

The analysts estimate that Saramacca will add over 200,000 ounces per year to Rosebel’s production, and Haughton believes that this will improve its cash costs to ~$625 per ounce for 2020–2023 and improve Rosebel’s net present value by 10%.

Other rating changes

BMO Capital Markets reinstated its “outperform” rating for IAG stock on September 6, 2017. The firm has a target price of 7.5 Canadian dollars on the stock. BMO had upgraded IAG’s stock from “market perform” to “outperform” on August 23, 2017, anticipating higher grades for Saramacca’s resources and a larger-than-expected initial estimate.

National Bank Financial also upped its target price for IAG, from 8.5 Canadian dollars to 9.0 Canadian dollars, on September 6, 2017. The firm now has an “outperform” rating on the stock. TD Securities, on the other hand, cut its target price for the stock from 11.0 Canadian dollars to 9.0 Canadian dollars on September 7, 2017.

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