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Analysts’ Favorites: A Look at the Top 10 Gold Miners

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Part 7
Analysts’ Favorites: A Look at the Top 10 Gold Miners PART 7 OF 11

IamGold’s Strong Exploration Results Catch Analysts’ Attention

Analysts’ ratings for IAG

IamGold (IAG) is a Canada-based gold miner that has four operating miners on three continents. IAG stock is covered by 13 analysts. Of these analysts, 54% rate it as a “buy,” and 46% rate it as a “hold.” IAG doesn’t have any “sell” ratings. 

Among IamGold’s peers (GDX) (GDXJ) such as Yamana Gold (AUY), Eldorado Gold (EGO), and New Gold (NGD) have “buy” ratings from 43%, 50%, and 25% of the analysts, respectively.

IamGold’s Strong Exploration Results Catch Analysts’ Attention

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Returns for IAG

IamGold stock has been the best-performing gold miner in 2017 year-to-date. Through September 29, 2017, IAG stock has gained 58.4%. The gains by its peers are muted in comparison. Along with the strong operational performance YTD, exceptional exploration results by the company have been responsible for the outperformance. 

The company announced an 80% increase in Rosebel mine’s reserves in July 2017. In September 2017, it announced a significant gold discovery at its Saramacca site in Suriname. These results have the potential to significantly turn around the company’s fortunes. Many analysts have also started turning bullish on IAG after its strong exploration results.

Valuations

Traditionally, IAG stock has traded at a discount to its peers, mainly due to the higher-than-average costs and concerns regarding production growth amid difficult conditions at its mines. It is currently trading at a forward EV-to-EBITDA1 multiple of 5.2x. 

While the multiple still suggests a discount of 43% to its peer group average, the discount has narrowed since the end of 2016. Its current multiple also suggests a premium of 40% to its last five-year average multiple. 

Other valuation catalysts for the stock include the expectation of updated resources at Falagountou, which we should see by the end of the year.

  1. enterprise value to earnings before interest, tax, depreciation, and amortization
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