Goldcorp Inc. (GG, Financial) has been upgraded by TD Securities. The Canadian firm now suggests the miner is a buy and forecasts a target price of $18.50 per share.
The new rating is up from the previous hold rating, increasing the number of analysts who suggest to buy shares of the Canadian miner.
Now, eleven analysts out of a total of 24 suggest to buy Goldcorp Ă‚ while 37.5% of them advise to hold the stock.
The new target price of $18.50 per share represents a 7.5% decline from the previous target price of $20 per share and a 1.9% decrease from the analysts average target price.
The target price ranges between a low of $15 per share and a high of $28 per share.
Goldcorp closed at $12.42 yesterday, up 10 cents or 0.81% from the previous trading day. A volume of 8,221,058 shares was traded on the New York Stock Exchange versus an average volume of 11.18 million shares traded over the last 10 trading days and an average volume of 8.56 million shares traded over the last three months.
The new target price set by TD Securities represents a 49% upside in the current market price of Goldcorp. The gold stock gained 5% year to date but was outperformed by its peers Barrick Gold Corp. (ABX, Financial) and Newmont Mining Corp. (NEM, Financial):
Greg Barnes, an analyst at TD Securities, partially attributes the stock's underperformance to successful turnarounds at Barrick and Newmont over the past two years. However, Goldcorp's operational turnaround may soon be complete, giving investors the chance to re-engage after several years of disappointment.
The turnaround investors are expecting from the miner will probably include those explained by Andrew Kaip, an analyst at BMO, two days ago when he lowered the target price of Goldcorp to $15 per share. They are the correction of inefficiencies that will allow the company to generate $250 million annually in two years, the improvement of operations at the Cerro Negro mine and an updated resource estimate at Cochenour.
Barnes said that the new target price was set according to “a 1.4x NAV multiple and a 7.5x 2018 EBITDA multiple,” which are slightly lower than the multiples used for Barrick and Newmont.
Disclosure: I have no positions in any stock mentioned in this article.
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