- Morgan Stanley updates its outlook on gold miners, favoring companies that are either entering their harvest phase or sporting flexible pipelines, low political risk and reasonable costs.
- With this in mind, the firm upgrades Franco-Nevada (FNV -0.2%) to Overweight from Equal Weight and raises its price target to $61 from $57.50, viewing the recent weakness from FNV’s oil price exposure as an opportunity to add a high quality royalty company with a strong balance sheet and well diversified portfolio; as FNV’s new metal assets begin to contribute, its oil exposure declines from 20% of revenue to less than 12% going forward.
- Meanwhile, Stanley downgrades Royal Gold (RGLD -4.1%) to Equal Weight from Overweight, as its original thesis has played out that as the Mt. Milligan project ramps up and metal deliveries to RGLD increase, the stock’s multiples would expand.