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Why Is Agnico Eagle Mines Analysts’ Favorite Gold Equity Bet?

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Jun. 28 2019, Updated 2:36 p.m. ET

Analysts’ ratings for Agnico Eagle Mines

According to the consensus compiled by Thomson Reuters, 17 analysts currently cover Agnico Eagle Mines (AEM). Out of these, 82.0% have given it “buy” ratings, while the remaining 18.0% have given it “hold” ratings.

Among to its mining peers, AEM has more “buy” recommendations than Yamana Gold (AUY), Barrick Gold (GOLD), and Kinross Gold (KGC), which have “buys” from 50.0%, 16%, and 40% of analysts covering them, respectively.

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Sentiment improved

Analysts’ sentiment for Agnico Eagle Mines has improved over the last few months. Until about a year ago, only 59.0% of analysts rated it as a “buy.” Agnico’s first-quarter results beat earnings estimates. Its EPS beat analysts’ expectation of $0.09. Its revenue came in at $532.2 million, higher than analysts’ estimate of $515 million. You can read AEM Beats Q1 Earnings and Revenue Estimates, Wall Street Bullish for a detailed analysis. Its project execution has changed analysts’ views on the stock. Agnico’s stock has been on an uptrend in 2019, mainly because of its project execution. 2019 is expected to be a harvest year for the company. Many of its projects are expected to come online this year.

Earnings estimates

Agnico Eagle Mines’ revenues are expected to increase by 8.6% in 2019. After rising 8.6%, analysts expect the company’s revenues to rise 16% in 2020. This is mainly due to the company’s new projects that are expected to come online in the second half of the year. Its EBITDA are also expected to see a rise of 25.7% YoY in 2019 to $947 million.

Its margins are also expected to improve 39.7% and 42.7% in 2019 and 2020, respectively, due to the ongoing improvements in costs as new projects come online at lower than the company’s current average cost.

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