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Summary

  • This is a report on analyst data for precious metals streamers.
  • Share prices have continued to rally on average during the past month.
  • Price targets have followed suit and increased by 11.6% on average.

Following our analyst watch updates for gold and silver miners for the month of March, we would like to proceed and summarize the latest analyst price targets and recommendations for precious metal streaming companies. As always in this series of articles, we will also make comparisons with last month's edition.

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).

Not all analysts release their predictions to Yahoo.com, which is the data source for this article series. 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 database may consider fewer analysts than actually follow some of the companies.

The table below summarizes our data. Grey columns represent data sourced directly from Yahoo.com, and light green colored columns represent processed data derived from this source data.

The first three columns list the company names, ticker symbols and share prices at the time of writing, followed by the change in share price since the last edition.

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 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 remaining columns list data points computed as percentages of the share prices at the time of writing as given in the third column. The column titled "median-price" gives the differences between the share prices and the median target prices. 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 February report, with the last column giving the average changes over the low, median and high price targets.

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The chart below illustrates the share price change since last month. We take note that shares of Royal Gold and Silver Wheaton appreciated considerably, while small losses are recorded for the other two companies Franco Nevada and Sandstorm Gold.

On average, the four companies have rallied 3.9% since our last article in this series, about a month ago, which is less than the 19.5% registered the month prior.

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 30% below the median price target indicating the greatest potential for this streaming company, followed by Silver Wheaton (17%) and Royal Gold which is trading a mere 4% below the median price target. Franco Nevada on the other hand continues to trade 4% above the median price target.

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Small differences between high and low targets indicate that analysts concur on the price targets whereas a high difference indicates diverging analyst opinions. The chart below illustrates the price target range for the four companies in our watch list.

Disagreement among analysts is recorded in a rather narrow range of 30% and 50% of the current share price for all four considered streaming companies.

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The next diagram visualizes the average target change since the beginning of February. On average targets have risen by a healthy 11.6% making good on last month's target cut in the face of rising share prices.

Sandstorm Gold's price targets increased by 23% and price targets for the other three companies increased by 6% to 11% since early February.

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The analysts' investment recommendation expressed on a scale from 1 to 5 with 1 indicating a "strong buy," and 5 indicating a "sell" recommendation.

Royal Gold's recommendation score dropped by a fraction while the other scores remained unchanged from last month. Silver Wheaton remains the darling of analysts, and despite continuing strong performance Franco Nevada remains at the rear of this ranking.

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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.

Source: Precious Metal Streamers Analyst Watch: March Edition