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A Look at Recent Upgrades and Downgrades for Gold Miners

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Rating changes

After having looked at the consensus analysts’ ratings and target price upsides and downsides in the previous part of this series, we’ll look at the recent analyst rating changes for these gold miners. These changes are usually based on the shift in analyst sentiment due to potential catalysts. It is important that investors watch out for these changes and the factors driving them.

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Any upgrades for Iamgold?

After Iamgold’s (IAG) 2Q16 release, Mackie Research upgraded the stock from “sell” to “hold.” It also increased the target price from 4.5 Canadian dollars to 6.6 Canadian dollars. The broker said, “With a flat production profile Iamgold has become effectively a proxy for gold price expectations.”

While TD Securities maintained its “hold” rating for Iamgold, it increased its target price from 5.5 Canadian dollars to 6.5 Canadian dollars.

Canaccord Genuity also increased its target price for Iamgold after its 2Q16 results from 6.5 Canadian dollars to 7.5 Canadian dollars. CIBC also increased its target price from $4.50 to $5.35 while maintaining the “sector perform” rating.

Fuller valuation for Agnico

According to an analyst at Citigroup (C), “While Agnico deserves recognition for its superior assets and execution, we struggle to justify a premium of this magnitude.” Citi has a “sell” rating on Agnico Eagle Mines (AEM) with a target price of $44.

Credit Suisse has an “outperform” rating on the stock with a target price of $69. According to Credit Suisse, “Agnico-Eagle Mines is a top pick for its strong exploration and project pipeline, strongest growth profile amongst the senior gold producers over the next five years, operational consistency, and strong balance sheet.

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“Agnico-Eagle Mines is one of the few companies we cover that has added to its net asset value per share over the past 12 months. Agnico-Eagle Mines’ pipeline includes near-mine opportunities at assets in Nunavut, Quebec, Finland and Mexico that have the opportunity to improve its production profile at relatively low capital intensity.”

Changes in EGO and NGD

After Eldorado Gold’s (EGO) upbeat investor day update on September 7, Credit Suisse upgraded the stock from “neutral” to “outperform” and raised its target price from $5.00 to $5.50.

Credit Suisse noted, “We upgrade Eldorado Gold to Outperform on improved clarity on its longer term outlook, attractive Price to Net Asset Value (P/NAV) and a receding Turkey exposure headwind. Our target increases as we raise our net asset value by 4% to $4.92 per share (U.S.) from $4.71 per share on increased value for Skouries, Perama and TZ, partly offset by less value for Efemcukuru and Olympias.”

Goldman Sachs also thinks that the company’s underperformance provides an opportunity. The broker upgraded EGO to “buy” from “neutral” in August while increasing its target price from $4.05 to $5.00.

In September 2016, Desjardins upgraded New Gold (NGD) to “buy” from “hold” with a target price of $7.00.

RBC Capital Markets, on the other hand, cut its target price for New Gold from $7.60 to $7.00. It has a “sector perform” rating on the stock.

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