Precious Metal Streamers Analyst Watch: October Edition

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Includes: FNV, RGLD, SAND, SLW
by: Itinerant

Starting in March this year we have been keeping records of analyst price targets provided by Yahoo.com and have been providing updates on our observations on a monthly basis. The present installment for the month of October summarizes our current data and reports on changes in price targets since our September edition in this series.

Streaming companies provide venture capital for mining companies in exchange for an interest in mine production. Such companies offer leveraged exposure to the underlying commodity at a reduced risk compared to mining companies.

In our database we are considering four precious metal streaming companies: Silver Wheaton (NYSE:SLW), Franco Nevada (NYSE:FNV), Royal Gold (NASDAQ:RGLD) and Sandstorm Gold (NYSEMKT:SAND).

All companies mentioned in this article may have more analysts following their progress than considered in our database. This difference is due to the fact that not all analysts release their predictions to Yahoo.com. Instead, in many cases analyst data are considered as proprietary information only available to subscribers of the analysts' services.

The table below summarizes our data. The first three columns list the company names, ticker symbols and share prices 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 numbers of analysts providing data to Yahoo.com and the mean recommendations 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 derived from our source data. These data points are given in percentages related to the share price at the time of writing. The column titled "median-price" gives the differences between the share price and the median target price. The column titled "high-low" gives the differences between the high and the low targets. The last four columns titled "target change" document the changes in price targets since the September report with the last columns giving the average change over the low, median and high price targets.

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The following four diagrams visualize the four columns from the table above titled: "median-price," "high-low," target change average" and "recommendation."

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"Median-price." A relatively high difference in between the current share price and the median price target can indicate a high potential for share price increase during the coming 12 months. Caution needs to be exercised, however, since catalytic events take time until they are reflected in analysts' price targets. Franco Nevada continues to trade almost exactly on the median price target for this company whereas Sandstorm Gold is looking at a 50% share price increase according to analysts.

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"High-low." Small differences between high and low targets indicate that analysts concur on the price targets whereas a high difference indicates diverging analyst opinions. Disagreement among analysts is highest for Silver Wheaton and lowest for Sandstorm Gold.

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"Target change average." This diagram visualizes the average target change since last September. Price targets for Sandstorm Gold have been raised; targets have been cut for all others. On average price targets were cut by a modest -1.41%.

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"Recommendation." The analysts investment recommendation expressed on a scale from 1 to 5 with 1 indicating a "strong buy", and 5 indicating a "sell" recommendation. The small red bar indicates the change in the recommendation since our September edition. Silver Wheaton remains the analysts' darling out of the considered group of companies, closely followed by Sandstorm Gold.

To conclude...

Analysts seem to rate Sandstorm Gold very strongly. There appears to be agreement with regards to price targets among the three analysts providing data for our report and the median price target is almost 50% higher than the current share price.

This article and also this one provide some interesting further reading on the four mentioned streaming companies.

If the present article has been of interest then we would like to recommend our articles on analyst targets for gold miners and silver miners.

... one final chart

Before we finish we would like to show one final chart illustrating the development of dividend yield since the start of 2012. Silver Wheaton holders have a small advantage over shareholders of the other companies in this respect; Sandstorm Gold does not pay dividends, yet.

SLW Dividend Yield (<a href=

SLW Dividend Yield [TTM] data by YCharts

Disclosure: I am long SLW, SAND. 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.