CIBC Notes Agnico Eagle (AEM-NYSE, Outperformer Rated, US$72.00 Price Target) Q2/23 Solid EPS And Operating Beat; Guidance Reiterated As Expected, Likely To Achieve TopEnd.
AEM reported adj. EPS of $0.65, beating both our estimate of $0.50 and consensus of $0.55. The beat was driven by stronger production than forecast at 873koz vs. CIBC at 858koz and consensus at 853koz, aided by lower cash costs of $840/oz vs. our estimate of $867/oz. AEM reiterated production, costs and capex guidance and noted favourable foreign exchange rates and the easing of certain inflationary pressures as positives during the quarter. Accounting for a strong Q2 performance and downtime at LaRonde in H2/23, we continue to expect the company to achieve production of 3.43Moz, near the top end of its guidance of 3.24M-3.44Moz, but at slightly lower cash costs of $852/oz ($858/oz prior), near the bottom end of guidance of $840- $890/oz. Should Kittila receive a go-ahead decision to return to 2.0Mpta in Q3, we expect that production guidance could be revised upward. We view these results positively and reiterate our Outperformer rating on the top pick in our
coverage universe. AEM currently trades at 0.9x P/NAV vs. peers at 0.9x and 9.1x 2023E P/CF vs. peers at 8.7x at spot.