CIBC CIBC Capital Markets analyst Anita Soni lowered her price target on Agnico Eagle Mines Ltd. in response to the precious metals company’s weaker-than-expected production and cost guidance released last week. Her price target went to US$69 from US$73 but her “outperformer” rating was retained.
Ms. Soni said her net asset value for the company has dropped from $43.41/share to $39.70/sh and her estimated 2023 cash flow per share decreased from $4.96 to $4.85 as a result of the revisions to her production and cost estimates.
However, she pointed out that AEM noted several areas for upside, including the optimization of ore sources in the Abitibi Gold Belt at the company’s sites in Ontario and Quebec, as well as lifting of restrictions on noise at Fosterville and throughput at Kittila.
“Positive catalysts are currently not included in our model. As such, we see the stock as de-risked for 2023 from an operational standpoint. With shares off 6% since the company reported (compared to 5% revision to our target), we believe negative revisions are priced in,” the analyst said.
Agnico Eagle remains CIBC’s top pick in the sector, and Ms. Soni also expects some inflation relief this year, which will work in the stock’s favour.
“Despite the inflationary pressures AEM is now starting to experience, it remains one of the lower-cost senior gold producers and, as such, we expect it will be able to maintain and reduce costs earlier than peers (less leverage from low grades). Although it has not been included in guidance, AEM noted it could start to see cost pressures ease in H2/23, particularly if the current restrictions in place at Kittila and Fosterville are lifted,” she said.
The average price target is US$63.20.