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Why IAMGOLD Has Climbed the Ranks among Analysts

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Nov. 20 2020, Updated 12:56 p.m. ET

Analysts’ ratings for IAG

Currently, IAMGOLD (IAG) has the third-highest number of “buy” recommendations among analysts at 75%. The other 25% analysts have “hold” recommendations on the stock.

Like Agnico Eagle Mines (AEM) stock, IAG has seen a significant turnaround in analysts’ sentiments. Until about a year ago, only 54% of analysts were recommending “buys” on the stock. Its target price of $7.60 implies a potential upside of 150%.

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Could analysts’ sentiment reverse?

IAG’s first-quarter and second-quarter operating results were strong. In the third quarter, it reported EPS of $0.03, beating the consensus estimate by $0.02.

However, during the release of its year-end production results and 2019 guidance on January 16, the company stated that it was expecting reduced production and higher all-in sustaining costs in 2019. This development is likely to dent analysts’ positive sentiments.

IAMGOLD’s reserve updates and other organic growth opportunities have, however, remained quite bright, which should support its long-term production growth.

Year-to-date, IAG has fallen 18% as of January 17, 2019, compared to the 2% fall in the VanEck Vectors Gold Miners ETF (GDX). It’s underperforming most of its peers. Among its peers, Agnico Eagle Mines (AEM), Barrick Gold (GOLD), Eldorado Gold (EGO), and New Gold (NGD) have seen price action of -2.3%, -12.1%, -1.7%, and 38.4%, respectively, so far this year.

Analysts’ estimates

Analysts expect IAG’s revenue to rise 2% in 2018, 1.9% in 2019, and 8.8% in 2020. Its Saramacca project is expected to come online in 2019, which should drive its volumes going forward.

In line with its revenue, IAG’s EBITDA is expected to rise 7.1% and 18.1%, respectively, in 2019 and 2020, implying margins of 29.5% and 32%, respectively. Its higher margin expectations are the result of its lower cost estimates as its production ramps up.

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