A New Reality for Gold Stocks - UBS

With the rapid decline in commodities over the past month – gold is down 15%, silver down 23%, copper down 14%, zinc down 20% - UBS Securities analyst Brian MacArthur has updated his Net Asset Value (NAV) figures and price targets on gold stocks to reflect the new reality. The result is a drop in gold equity price targets of about 10%. Still, given the implied returns-to-price targets, he has the following companies all rated as “buys.”

Agnico Eagle Mines Ltd. (AEM): With total NAV now lowered to $51.78 per share from $57.51, and operating NAV reduced to $50.80 from $56.23, the new target price is $70, based on a 1.35 multiple applied to operating NAV. That’s a 9.1% decrease from the previous target of $77.

Barrick Gold Corp. (ABX) : Total NAV reduced to $40.99 per share from $45.67, and operating NAV reduced to $37.97 from $41.64. With a 1.2 multiple applied to operating NAV, the new target is $49, down from $54, for a 9.3% change.

Centerra Gold Inc. (CAGDF.PK):  The new total NAV figure is C$10.54, from C$11.30, while operating NAV has dropped to $8.84 from C$9.70. The new target is C$8.75, a 7.9% decrease from the old target of C$9.50, based on a operating NAV multiple of 0.8.

Goldcorp Inc. (GG): The new target price is $45, a 6.3% decrease from the old target of $48. That’s based on operating NAV of $31.36, down from $32.381 and an operating NAV multiple of 1.35. Total NAV is $34.12, down from $36.11.

Kinross Gold Corp. (KGC): Total NAV has been revised to $16.45 per share from $19.50, while operating NAV is now $15.97, compared to $18.92. The new price target on the stock is $20, down from $24, a drop of almost 17%, based on a 1.25 multiple applied to operating NAV.

Newmont Mining Corp. (NEM): The new price target of $58 per share is 9.4% lower than the old $64 target, based on operating NAV of $46.99. and  operating NAV multiple of 1.2, down from previous figure of  $51.76. Total NAV is $48.26, down from $53.39.

Comments

[Jake2:]

So, which stock has the edge, or is it a question of an "equal among equals?"

2008 Aug 14 11:54 AM

[Charles Lon...:]

My crystal balls chime for AEM.

2008 Aug 14 04:37 PM