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How Did Analysts React to Goldcorp after 1Q16 Results?

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Apr. 29 2016, Published 11:17 a.m. ET

Wall Street ratings

Goldcorp (GG) reported an in-line 1Q16 and maintained its production and cost outlook. Now let’s look at Wall Street’s reaction after the company released its results.

Goldcorp’s in-line results didn’t cause any upgrade or downgrade by Wall Street analysts. It currently has 43% “buy” ratings and 43% “hold” ratings. Its target price is $17.60, which implies a potential downside of 7% from its current market price.

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Higher ratings than peers 

As you can see in the above graph, Goldcorp still has a higher percentage of “buy” recommendations than its nearest peers (GDX), Barrick Gold (ABX) and Newmont Mining (NEM). Only Agnico Eagle Mines (AEM) has a higher percentage of “buy” recommendations at 58%. Yamana Gold (AUY), on the other hand, has the lowest “buy” recommendations at 29%.

However, you should note that analysts’ bullishness for Goldcorp has corrected sharply over the last quarter. At the beginning of 2016, 83% of analysts rated Goldcorp a “buy.” In response to Goldcorp’s disappointing production guidance going forward three years, analysts have pared back their estimates and ratings.

Analysts’ reactions

RBC has reiterated its “underperform” rating on Goldcorp with a target price of $16.50 on April 27, 2016.

Jefferies also maintained its “hold” rating and target price of $17 on the stock on April 28, 2016.

Another alternative to gain exposure to precious metals is investing in ETFs such as the Global X Silver Miners ETF (SIL) and the iShares MSCI Global Gold Miners (RING).

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