National BankGiven the recent strength in gold and their highlighted comment, was surprised at the drop in target price although they did that for almost every company they cover within the sector. GLTA
Ahead of third-quarter earnings season in the precious metals sector, equity analysts at National Bank Financial Markets remain constructive on spot gold prices over the next year, however they warn of near-term volatility.
“In our opinion, over the coming months, we could continue to see the spot gold price swing wildly (+/- one or more percent) around key U.S. economic data points with the U.S. Fed’s latest dot plot calling for one additional rate hike before the end of the year as inflation remains above the target level and the labour market remains robust,” they said. “Generally, we believe that in this gold price scenario, the best gold companies to invest in continue to be those with near-term production growth that is well funded and relatively lower-risk, companies with a strong balance sheet and a good catalyst calendar as well as a strong operational track record.”
In a research report released Monday, the firm updated its price deck for all metals and foreign exchanges rates to incorporate third-quarter average, while it maintained his expectations for the fourth quarter and beyond.
“For concentrate producers, provisional pricing adjustments are generally expected to be modestly net negative for 3Q23 earnings with gold, silver, copper finishing lower quarter-over-quarter while lead was higher,” the analysts said. “A number of producers have guided to a back-half-weighted production year, and thus, we expect several companies to have increased production quarter-over-quarter. Several currencies including the BRL and MXN gained strength against the USD and could prove to be headwinds for cost guidance, while the TRY continued to depreciate providing a potential tailwind.”
“At the time of writing, we have conviction in Pan American Silver and Torex Gold missing Bloomberg consensus Adj. EPS estimates, while we expect Agnico Eagle, Kinross and Lundin Gold to beat. Details behind our conviction calls are laid out later in this report.”
Changes for other senior producers were:
- Agnico Eagle Mines Ltd. ( “outperform”) to $86 from $90. Average: $89.98.