Iamgold Corp. (IAG, Financial) closed yesterday, Sept. 29, down 56 cents or 8.41% from the previous trading day at $6.10, following the news that Canaccord Genuity has downgraded shares of the Canadian mid-tier gold producer from a "buy" to "hold" rating.
This the first downgrade Iamgold Corp. got after more than eight months during which the Canadian mid-tier gold producer received three upgrades from the Canadian Imperial Bank of Commerce ("neutral" to "outperform") on Sept. 6, from BMO Capital Markets ("perform" to "outperform") on Aug. 23 and from Credit Suisse (to "neutral") on May 10.
Source: Yahoo Finance
Over the same span, BMO Capital Markets started covering shares of Iamgold Corp. with a "market perform" rating on Feb. 6, while Credit Suisse downgraded the Canadian miner – the only downgrade rating in eight months - to "underperform" on Jan. 13.
This downgrade Iamgold received from Canaccord Genuity has dragged the recommendation rating down slightly: 2.2 out of 5. The recommendation rating ranges between 1.0 ("strong buy") and 5.0 ("sell").
Source: Yahoo Finance
The recommendation rating of 2.2 is a mean of 13 opinions of analysts who were surveyed. The majority of them – 6 out of 13 – is for a hold recommendation, four analysts are for a buy recommendation while two are for a strong buy recommendation.
Only one analyst is recommending selling shares of Iamgold today.
The analysts’ average target price is $7.93 per share, which represents 30% upside in the current market value of Iamgold Corp.
Source: Yahoo Finance
Despite the recent Canaccord Genuity’s downgrade to hold, for the remainder of fiscal 2017, I would take into consideration the possibility to feed the position with some extra shares of Iamgold since exploration results expected from Falagountou - Essakane mine’s satellite pit – plus the release of the first estimates on bearing mineral resources at Monster Lake in Quebec and at the Nicaraguan asset, Eastern Borosi, will be supportive to the share price of Iamgold on the New York Stock Exchange over the coming weeks.
Iamgold has a market cap of $2.85 billion, a price-book ratio of 0.98, a price-sales ratio of 2.42, a price-earnings ratio of 5.30 and a forward price-earnings ratio of 123.46. When the latter is multiplied by an EPS of 7.25 cents, calculated as a time (quarters) weighted average of EPS forecasted by analysts for full fiscal 2017 and 2018, it yields a value of $8.95 per share.
The EV-to-EBITDA of Iamgold is currently at 2.66 times.
Iamgold has an EVO (enterprise value) to the total volume of total proven and probable mineral reserves (ounces) -- including the recent 80% increase in Rosebel mine’s reserves – of $196.89.
Disclosure: I have no position in the stock mentioned in this article.
