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Why Wheaton Precious Metals Is Still Analysts’ Top Gold Bet

Anuradha Garg - Author
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Nov. 20 2020, Updated 12:55 p.m. ET

Analysts’ ratings for WPM

Among major gold (GLD)(IAU) mining and gold streaming companies (GOAU), Wheaton Precious Metals (WPM) is analysts’ favorite and has received the most “buy” recommendations at 91%. According to the consensus compiled by Thomson Reuters, 11 Wall Street analysts are currently covering WPM.

At the end of November, the stock had “buy” ratings from 100% of the analysts covering it. Credit Suisse (CS) downgraded it from “outperform” to “neutral” in December.

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Distinct business model

Wheaton Precious Metals is a royalty and streaming company with a different business model than its mining peers (NUGT). Streaming companies don’t own the mines but just provide up-front finance to miners in exchange for the right to buy their product streams at lower prices in the future.

Future development potential

After falling 11.7% in 2018, WPM’s stock has gained 27% year-to-date as of March 25. It has significantly outperformed the VanEck Vectors Gold Miners ETF (GDX), which has gained 10.3%. The most recent boost to its share price was from the favorable settlement of its long-standing tax dispute with the Canada Revenue Agency. Moreover, its growth profile seems to be balanced with a large part of its production tied to the geographically stable Americas region.

Analysts expect Wheaton’s revenue to rise 7.6% in 2019 and 7.1% in 2020 after a fall of 5.8% in 2018. Its EBITDA is also expected to rise 12% and 7.8%, respectively, in 2019 and 2020, implying margins of 65.8% and 66.2%, respectively, compared to 62.9% in 2018.

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