Resource Intelligence
Markets, News & Features, Resource News

Time to give Agnico-Eagle another look

By · February 24, 2012 · 10:05 am · Leave a Comment

 

Click here to read the whole story or read an excerpt below.

By Peter Koven

The past six months have been an extended nightmare for shareholders of Agnico-Eagle Mines Ltd., as this chart shows. The company has been punished for shutting down its Goldex mine in Quebec over safety concerns, and for ongoing operating problems at its Meadowbank mine in Nunavut.

Nonetheless, Dundee Capital Markets analyst Paul Burchell thinks it is time for investors to “get back on the horse”. While Agnico-Eagle has lost some of its growth potential and has lowered its guidance, he pointed out that it still has a solid base of producing mines.

Mr. Burchell does not think the reduced guidance is necessarily a bad thing; after missing more aggressive targets, he figures the new ones are more reliable. His net asset value estimate dropped 13.5% as a result of the lower guidance, but given that he is more confident in Agnico’s outlook, he boosted his discounted cash flow multiple on the stock to 0.8 times (from 0.6 times). As a result, his price target increased to $48.00 a share (from $44.00) and he boosted his rating on the stock to buy (from neutral).

“While gold companies, like battleships, don’t turn on a dime, we believe there is more upside potential than downside risk in owning Agnico shares at this time,” Mr. Burchell wrote.

Comments? We want to hear what you have to say!

You must be logged in to post a comment.

Enter your email address to receive actionable daily news.

Delivered by Google's Feed Burner!

Resource Intelligence