The first moon of 2014 is almost over and we suddenly realize it is high time to regale our readers with the first edition of our base metals analyst watch for the new year.
As always we are summarizing analyst targets and recommendations for selected base metal mining companies. The present January edition of this article series reports on the latest entries in our data base and also provides some comparison to last month's edition.
Most companies mentioned in this article have more analysts following their progress than considered in our database. This difference is due to the fact that not all analysts release their predictions to Yahoo.com, which is the source of the presented data.
Unchanged from the last installment, we are considering the following companies in alphabetical order: Augusta Resource (NYSEMKT:AZC), Capstone Mining (OTCPK:CSFFF), Copper Mountain Mining (OTCPK:CPPMF), First Quantum Minerals (OTCPK:FQVLF), Freeport-McMoRan (NYSE:FCX), Hudbay Mining (NYSE:HBM), Nevsun Resources (NYSEMKT:NSU), Southern Copper (NYSE:SCCO), Taseko Mines (NYSEMKT:TGB), Teck Resources (TCK), Thompson Creek Metals (TC), Turquoise Hill Resources (NYSE:TRQ).
N.B. Price targets for Imperial Metals, Copper Mountain Mining, First Quantum Mineral and Capstone Mining are provided to us in Canadian Dollars and we have used a conversion rate of 1 Can$ = 0.90 US$.
Our data for these stocks is summarized in the table below. The first three columns list the company names, ticker symbols and share prices 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 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 following columns are colored in light green and contain data derived from our source data. These data points are given in percentages related to the share price at the time of writing. The column titled "median-price" gives the difference between the share price and the median target price. The column titled "high-low" gives the difference between the high and the low target. The last four columns titled "target change" document the changes in price targets since the December report with the last columns giving the average change over the low, median and high price targets.
The difference between the current share price and the median price target is listed in column "median-price" and visualized in the diagram below. Under normal circumstances we would view a large value in this column as an indicator for the potential of disproportionate gains over the coming year.
Augusta Resource is still regarded as the stock with the greatest potential in this analysis, trading 232% below the median analyst target. Investors apparently stand to win big time should the company's Rosemont mine be permitted.
Two more high-risk investment propositions are ranked as distant second and third, namely Taseko Mines and Turquoise Hills both trading more than 50% below the median target (down from 100% last month due to substantial share price appreciation going into the new year).
First Quantum on the other end of the spectrum is trading very closely to the median price target.
Column "high-low" measures the divergence in analyst opinions. The results from this column in the table at the top of this article are visualized in the next diagram.
Monthly changes in price targets as listed in the table above are visualized in the diagram below.
Target cuts and upgrades are quite evenly distributed. On average price targets increased by a negligible 0.7% in the past month for the companies contained in our watch list.
The final diagram visualizes analysts' recommendation ratings. The small red bars indicate changes in the recommendation score since last month.
Nevsun Resources and Augusta Resource continue to receive the most favorable ratings, followed by Imperial Metals and Capstone Mining. Southern Copper's rating and Hudbay Minerals' rating received substantial improvements.
Thompson Creek Metals still carries the red lantern in this ranking.
Disclosure: I am long CSFFF, . 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.