We have been following analysts' price target projections for precious metal miners for some time now and have been providing monthly updates of our observations. The following article represents the June edition of this series of articles.
We have added stocks to our watch list since our May-Edition and have also expanded our analyses for the present article. In order to keep information manageable, we have decided to report only on gold miners in this article, with another offering to follow in due time for silver miners and streaming companies.
As in previous editions, we will be considering the following companies in alphabetical order: Agnico Eagle (NYSE:AEM), AuRico Gold (NYSE:AUQ), Barrick Gold (NYSE:ABX), Eldorado Gold (NYSE:EGO), Goldcorp (NYSE:GG), IAMGOLD (NYSE:IAG), Kinross Gold (NYSE:KGC), Newmont Mining (NYSE:NEM), Yamana Gold (NYSE:AUY). Additionally we are including Alamos Gold (NYSE:AGI), Allied Nevada (NYSEMKT:ANV), New Gold (NYSEMKT:NGD), Randgold (NASDAQ:GOLD) here for the first time.
The table below summarizes our current data. The first three columns list the company name, ticker symbol and share price at the time of writing. Price targets (low, median and high) are listed in the following three columns. These targets are followed by a column giving the number of analysts providing data and the mean recommendation given by these analysts ranging from 1.0 (strong buy) to 5.0 (sell). This concludes the data sourced directly from Yahoo.com.
The following columns are colored in light green and contain data given in percentages related to the share price at the time of writing as documented in the third column. The column titled "median-price" gives the difference between the share price and the median target price. The column titled "high-low" gives the difference between the high and the low target. The last four columns titled "target change" document the changes in price targets since the May report with the last columns giving the average change over the low, median and high price targets.
We are especially interested in the following three measures documented in the table above:
- Column "median-price" indicates the potential of the stock as far as analyst targets are concerned.
- Column "high-low" measures the divergence in analyst opinions.
- Column "target change average" gives a measurement for the change in targets during the past month.
The results for these three columns are visualized in the three diagrams below.
The overall average change in price target during the past month was a cut of 13.8%.
Allied Nevada is currently trading the furthest below the median price target which can in some instances indicate high potential. However, in this particular case we suspect that the price has dropped due to a recent cash raising and not all analysts have updated their data accordingly. This thesis is further supported by the second diagram indicating the greatest divergence between high and low targets also computed for Allied Nevada.
Next in line in terms of potential is New Gold which is a growth orientated Canadian gold miner. New Gold is right on the median in terms of target divergence indicating relative agreement among analysts. New Gold's rating has dropped less than 10% during the last month which is also within line of the peer group considered for this article.
Analyst recommendations of 1.7 are given for New Gold and also for Randgold. On the other side of the spectrum IAMGOLD is given a 2.8 and Allied Nevada gets a 2.5.
Price targets for Randgold held up the best during the past month closely followed by Barrick Gold. The largest average target cut of 85.5% during the past month was recorded for IAMGOLD. This dramatic downgrade was mostly driven by a reduction of the high target from $25.82 a month ago, to $14.43 at present. The chart below illustrates the share price development and also shows the price targets during the past three months.
Our pick of the month: analyst data would suggest that New Gold is most worthy of a closer look. This article by your humble scribe might provide a useful starting point for further research.
Disclosure: I am long AEM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.