Why Eldorado Gold Became the Least Impressive Gold Stock

Anuradha Garg - Author

Oct. 15 2019, Updated 1:23 p.m. ET

Deteriorating analyst sentiment

Eldorado Gold (EGO) is one of the few gold stocks that have seen rapidly deteriorating sentiments from analysts in the last year. Currently, only 15% of the 13 Wall Street analysts covering it rate it as a “buy.” This stands in sharp contrast to the ~78% “buy” ratings it had almost a year ago. A majority of 69% analysts rate it as a “hold.”

Eldorado stock has lost 18% of its value year-to-date as of June 14 in addition to its fall of 56% in 2017. Eldorado Gold stock suffered a great deal in 2017 due to its standoff with the Greek government and some technical issues at its mines in Turkey.

In contrast to Eldorado, its peers (GDX) (JNUG) Agnico Eagle Mines (AEM), Yamana Gold (AUY), and IAMGOLD (IAG) have risen 1.0%, 1.0%, and 2.2%, respectively.

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Positive development

On May 22, a positive development unfolded for the stock when Greece’s government announced that it was aiming to resolve a long-standing standoff with Eldorado Gold about its development work. While Eldorado Gold blamed the Greek government for not issuing the necessary permits, the government said that the company hadn’t submitted a complete plan. There had also been issues with Eldorado Gold following environmental regulations. Following the positive announcement, Eldorado Gold stock skyrocketed, and it’s risen 23% since then.

Analysts waiting on the sidelines

While with this announcement, some uncertainty has been removed from the stock, it still isn’t enough to turn analysts turn positive, as there will likely be several rounds of negotiations before Eldorado’s Skouries project in Greece gets the green light.

The company will also need a significant amount of funds and a number of years to complete Skouries. In the meantime, there could be execution and funding issues. Analysts are currently standing on the sidelines, with 69% recommending “holds” and waiting for more positive developments.


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