Citi “Another solid quarter [is] on deck” for Agnico Eagle Mines Ltd. , according to Citi analyst Alexander Hacking, who raised his estimates ahead of the release of its first-quarter results to account for a higher gold price forecast from the firm’s global commodities team.
“Citi expects average prices may trend higher over the next 3-6 months to $2,300 per ounce,” he said. “We see the market as supported well above $1,925/oz and in a bullish wildcard scenario, would call for $3,000/oz gold in a 12-month context. Positive factors include: Fed pivot, official sector demand, and alternate fiat demand.”
Mr. Hacking expects Agnico’s operating results to be “strong” but falling line with its guidance for production and costs. He’s currently projecting earnings per share of 58 US cents, which is 2 US cents higher than the consensus on the Street.
“We do not expect any significant corporate update,” he added.
Based on a “significant” increase to Citi’s gold price assumption, the analyst raised his 2024 EBITDA estimate by 3 per cent to US$4.1-billion and his 2025 projection by 32 per cent to US$3.7-billion.
He reaffirmed a “buy” recommendation and US$65 target for Agnico shares. The current average is US$66.95.
“AEM remains our top pick in Americas gold given its superior operating track record vs NEM and GOLD in recent quarters,” he said.
“Agnico is an excellent company in our view, with high quality assets and a strong operational track record. The company has demonstrated superior execution over the past decade. The acquisition of Kirkland Lake added low cost ounces in good jurisdictions. We currently see more upside than downside in the stock.”