Following our analyst watch articles for gold and silver miners, we would now like to update our analyst watch data for precious metal streamers. 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.
As in previous editions of this series, we will be presenting current analyst price targets as provided by Yahoo.com. The present instalment for the month of November summarizes our current data and reports on changes in price targets since our October edition in this series.
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. It is for this reason that our data base may consider fewer analysts than actually follow some of the companies.
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 October report with the last columns giving the average change over the low, median and high price targets.
The four diagrams below visualize four columns from the table above: "median-price", "high-low", target change average" and "recommendation".
"Median-price". A relatively high difference 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 typically take some time until they are reflected in analysts' price targets.
Sandstorm Gold is trading more than 60% below the median price target followed by Silver Wheaton and Royal Gold. The fourth precious metal streamer Franco Nevada is trading almost exactly at the median price target suggesting the smallest upside potential of the four companies.
"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 presumably fuelled by the recent deferral of the Pascua Lama mine construction by Barrick Gold also affecting the associated silver stream. Analysts' price targets only diverge by 18% for Sandstorm Gold.
"Target change average". This diagram visualizes the average target change since last September. All price targets have been raised during the past month by an average of 5.9%. The targets for Sandstorm Gold have received the greatest shot in the arm while targets for Royal Gold have only moved up a fraction on average.
"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 bars indicate the change in the recommendation since our previous article on precious metal streamers.
Silver Wheaton remains the analysts' darling out of the considered group of companies, closely followed by Sandstorm Gold. The recommendations for Silver Wheaton and Royal Gold have improved since our last update while the recommendation for Franco Nevada has been reduced.
The final diagram for this article shows the relative performance of the four considered companies during the past year. During this period of price decline for all for considered streaming companies, it has been Franco-Nevada outperforming the others by a healthy margin.
Disclosure: I am long SAND, SLW. 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.