TomasSereda/iStock via Getty Images
Alamos Gold (NYSE:AGI) +1.3% in Tuesday's trading as Bank of America upgrades shares to Buy from Neutral with a $20 price target, raised from $15.75, viewing the company as a solid name to own with gold prices on the run higher, noting a high quality asset base, exceptional track record of operational performance and attractive geopolitical risk profile.
Alamos' (AGI) recent acquisition of Argonaut Gold is a strong fit in its portfolio "with very tangible synergies, while maintaining the company's low jurisdiction risk focus," BofA's Harmen Puri believes, expecting the deal will be accretive on near-term earnings, cash flow and operational metrics.
The Argonaut deal also adds immediate production growth to Alamos (AGI), which investors should view as highly favorable in a bullish gold price environment given the added leverage, Puri says.
The analyst also notes that significant outperformance in gold in prior cycles has driven investors to move down-cap into the mid-tier and junior gold producer space for added leverage.