Credit Suisse upgrade
Improvement in the company’s operations as well as its leverage to gold prices were cited as main reasons for the upgrade. CS increased its expectations for gold prices. It now expects gold prices to increase through 2016, averaging $1,475 per ounce in 4Q16 and $1,500 per ounce in 1Q17.
Credit Suisse also said, “We believe IAMGold is turning the corner on operational and financial delivery following a challenging three-year period. IAG has above-average leverage to gold prices and benefits from cost exposure to the CAD and Euro.”
Other upgrades and downgrades
Paradigm Capital also upgraded Iamgold from “hold” to “buy” on July 18, 2016. The firm also increased the stock’s target price from $4 Canadian to $10 Canadian.
National Bank Financial decreased its 2Q16 EPS (earnings per share) on July 13, 2016. Now its EPS is -$0.07, below the previous estimate of -$0.06.
CIBC (Canadian Imperial Bank of Commerce) also upgraded IAG from “sector underperform” to “sector perform” on June 27, 2016. The upgrade reflects the stock’s higher leverage to gold prices, which is expected to remain elevated on global uncertainty.
Macquarie also upgraded IAG to “neutral” on May 5, 2016. The firm also increased its target price from $3 Canadian to $4.50 Canadian.
Most of the recent upgrades have been due to IAG’s higher leverage to gold prices and the positive gold price outlook. Peers (RING) such as Agnico Eagle (AEM), New Gold (NGD), Eldorado Gold (EGO), and Alamos Gold (AGI) have lower leverages than IAG.