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Do Analysts Want You to Buy Agnico Eagle Mines?

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Analysts’ ratings for Agnico Eagle Mines

Currently, 18 analysts are covering Agnico Eagle Mines (AEM), as per the consensus compiled by Thomson Reuters. AEM’s stock has 83.0% “buy” ratings and 17% “hold” ratings with no “sell” ratings.

Among its AEM’s peers (GDX)(RING) , it has more “buy” recommendations than Yamana Gold (AUY), Goldcorp (GG), Barrick Gold (GOLD), and Kinross Gold (KGC), which have “buys” from 69.0%, 44.0%, 10.0%, and 40.0% of analysts covering them, respectively.

Analysts’ sentiment has been improving over the last few months. Until about a year ago, AEM had “buy” ratings from only 50.0% of analysts covering it.

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Ratings changes

Agnico’s stock saw three rating upgrades in 2018. Barclays initiated coverage on Agnico on October 10 with an “overweight” rating. National Bank Financial upgraded AEM to an “outperform” from a “sector perform” on August 9. On July 30, RBC Capital Markets upgraded AEM from a “sector perform” to an “outperform.” It also raised its target price on the stock to $55.00 from $49.00.

Earnings estimates

Analysts expect Agnico Eagle’s revenue to increase 7% year-over-year in 2019 to $2.34 billion. Its revenues fell 2.3% in 2018 on less production. Going forward, AEM’s growth projects are expected to kick in, which should drive its production growth in 2019 and beyond. After rising 7%, analysts expect a revenue rise of 17% for AEM in 2020.

Agnico’s EBITDA is expected to rise 7% in 2019 on the back of improved production and revenues. The combination of improved costs and higher production should drive EBITDA growth of 29.7% for AEM in 2020, as per analysts’ consensus estimate. As with its revenue, the company’s profitability is expected to climb in 2019 and beyond.

These increasing margin expectations resulted from declining costs as its revenue increases. AEM’s upcoming projects should entail lower costs than its current average costs, which should help the company’s margins.

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