Precious Metals Analyst Watch: May Edition

by: Itinerant

One of the many useful features provided for investors by is a summary of analysts' price target predictions. We have been following these predictions for precious metal mining stocks and would like to report on the present state of these targets and on the changes since our last article on the topic a month ago. All readings presented in this article were taken just prior to the time of writing.

There has been ample reason to revise price targets for analysts recently due to a sharp drop in precious metal spot prices and also due to the release of many quarterly earning reports. These events have obviously resonated with analysts and as a general trend most targets have been cut.

We have prepared three tables summarizing our data; one for gold miners, one for silver miners, and another one for streaming companies. The respective first three columns of these tables list the company name, ticker symbol and share price 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 number of analysts providing data and the mean recommendation given by these analysts ranging from 1.0 (strong buy) to 5.0 (sell). This concludes the data sourced directly from

The following columns are colored in light green and contain data given in percentages related to the share price at the time of writing (third column). The column titled "price - median" gives the difference between the share price and the median price target indicating the potential of the stock. The column titled "high-low" gives the difference between the high and the low target measuring the divergence in analyst opinions. The last four columns titled "target change" document the changes in price targets since the April report with the last columns giving the average change over the low, median and high price targets.

Gold Miners

Targets for the considered gold miners have dropped on average by close to 25% during the past month (measured as all other percentages in this article in reference to the present share price). Barrick Gold (NYSE:ABX) was hit hardest with the median price target cut to $30.00 from $43.50 a month ago. Eldorado Gold (NYSE:EGO) (average: -8.1%) and IAMGOLD (NYSE:IAG) (average: -11.2%) showed the greatest resilience against downgrading.

In checking the difference between present share price and median price target we note that Eldorado Gold (85.1%) and IAMGOLD (81.5%) have the greatest potential to improve their share price over the coming year, whereas Newmont Mining (NYSE:NEM) (25.8%) and Goldcorp (NYSE:GG) (33.2) are viewed as being closest to their potential at present.

Price targets for Yaman Gold (NYSE:AUY) show the smallest spread with 76.3% between high and low target, whereas analysts seem most add odds with IAMGOLD (365.5%) and Barrick Gold (200.0%).

None of the companies receives a recommendation below 2.1, up from 1.9 a month ago.

Silver Miners

Target cuts for silver miners were a little more moderate than for gold miners with an average drop of 21%. Silver Standard (NASDAQ:SSRI) was suffering the most with targets reduced by 49.1% on average. Fortuna Silver (NYSE:FSM) on the other hand even managed to increase its targets ever so slightly.

According to analysts Silvercorp Metals (NYSE:SVM) seems to have the greatest growth potential with the median target currently listed 123.6% above the share price. Endeavour Silver (NYSE:EXK) (84.7%) and First Majestic Silver (NYSE:AG) (81.1%) are coming in second and third in this ranking.

Analysts are showing the greatest difference of opinion when it comes to the price target for Silver Standard diverging by 257.9%; and with only two analysts following Silvercorp Metals there is only a divergence of 5.1% between their targets.

None of the silver mining companies is presently receiving a recommendation below 2.0.

Streaming Companies

Streaming companies made the best showing in this month's report with targets cut by only 10% on average and targets for Franco Nevada (NYSE:FNV) even slightly upgraded. We have included Sandstorm Gold (NYSEMKT:SAND) this month, even though it is only covered by one analyst on at the moment.

Analysts are still indicating the greatest potential in this group for Silver Wheaton (SLW) with the median price target 75.1% above the present share price. However, analysts are also showing the greatest divergence of opinion for Silver Wheaton with the difference between the high and low targets at 69.2%. Silver Wheaton is also the only company covered in this article with a buy recommendation below 2.0.

Our Picks

Based on analysts opinions it seems that none of the gold miners are really strong buys and we will refrain from picking one this month. In the silver mining department we believe that Fortuna Silver is coming away with the strongest analyst backing. And our pick among streaming companies remains unchanged from last month with Silver Wheaton.

Disclosure: I am long EXK, AG, 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.

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