Agnico-Eagle Mines: Analysts Cut Price Targets on Q2 Earnings Miss

Agnico-Eagle Mines Ltd.'s (AEM) second quarter miss had analysts lining with cuts to the gold miner's price target.  

On Wednesday after market close, Agnico-Eagle Mines Ltd. reported reduced second-quarter earnings to $8.3-million or $0.06 a share, from $37.8-million, or $0.28 a share, in the year-earlier period, blaming sharply falling prices for zinc and lower production levels that resulted in cash costs of $113 per ounce, against negative $699 a year earlier. The company said the production ramp-up at the new Goldex mine near LaRonde has been slower than expected, while technical delays at the Kittila gold mine in Finland will push the start-up date from September into the fourth quarter.

Shares in Agnico were down almost 7% or C$4.30 to C$60.50 on Thursday afternoon.

In a note to clients, Blackmont analyst Richard Gray said:

While Q2 results were disappointing, more concerning is the slower-than-expected start-up at Goldex, which is expected to result in lower 2008 production (60,000 - 70,000 ounces versus 90,000 ounces previously) and the delays at Kittila.

To cap off this bad news, Agnico indicated that capital costs over the 2008 to 2010 period 'could be approximately 40% over the estimates provided in Dec. 2007.'

Mr. Gray lowered his 2009 earnings per share and cash flow per share estimates by 10 to 15% and decreased his net asset value for the company from $38.50 to $36.50. He lowered his price target from C$71 to C$66 and maintained his "hold" price target. 

Wellington West analyst Catherine Gignac lowered her price target from C$75 to C$65 and left her "market perform" rating unchanged.

In a research note, she said:

At current share price levels we believe Agnico-Eagle's growth profile seems to be fairly discounted by the market, and we believe the stock could experience relative weakness in the short-term due to the announced project delays and cost over-runs. Longer term, we expect the market will continue to favour Agnico due to the solid growth profile and stable operating base.

UBS analyst Brian MacArthur also lowered this price target from C$82 to C$77 but upgraded Agnico shares from "neutral" to "buy," given the recent sell off in the stock and the company's long-term growth profile.

Comments

[Golden Oxen:]

They have turned into wheeler dealers and trading wizards rather than paying attention to mining gold. What a shame Chairman Paul Penna had to die and leave the corporation in the hands of these imbeciles. I still remember him adding precious metals to the companies books and visiting the mine constantly. The wizards running it now are sitting in plush offices trading futures and awarding themselves options. Expect more bad news and you will not be disappointed. The severe winter story is next.

2008 Jul 25 03:37 PM