RBC Capital has downgraded Agnico Eagle Mines Ltd. (AEM, Financial) from Outperform to Sector Perform with a $67 price target.
On the basis of the firm’s decision to downgrade Agnico, there is the belief that the production targets met or exceeded by the miner are already priced into the stock’s premium valuation.
RBC Capital analyst Stephen Walker explained that “the shares appear to be currently pricing in the recent favorable guidance revision as well as the expected fourth-quarter and year-end reserve additions.”
Monday, Agnico closed at $57.25 per share, down 67 cents (1.16%) from the previous close. The stock gained 113% year to date on the New York Stock Exchange:
On July 27, Agnico reported quarterly adjusted net income of $35.0 million or 16 cents per share for the second quarter and beat analysts’ expectations by 6 cents. In the second quarter of 2015, the company reported net income of $10.1 million or 5 cents per share.
Agnico has declared a 10-cent quarterly dividend, a 25% increase. The previous quarterly dividend was 8 cents.
The miner reported revenue of $537.6 million, a 5.4% increase from the same quarter of 2015.
Quarterly gold production was 408,932 ounces of gold at total cash costs per ounce on a byproduct basis of $592.
For 2016 the miner now expects to produce approximately 1.58 million to 1.6 million ounces of gold (previously 1.565 million ounces) with total cash costs per ounce on a byproduct basis of $580 to $620 (previously $590 to $630) and AISC of approximately $840 to $880 per ounce (previously $850 to $890).
Looking ahead RBC Capital sees many potential exploration catalysts, including the miner’s advanced projects.
Disclosure: I have no positions in Agnico Eagle Mines Ltd.
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