The yield you never knewRaymond James published their "Base metal equity Investment case update" on April 23, 2009.
It's an interesting outlook as to where copper and moly prices could go in the near future. They see copper constantly rising this year and reach $2.75 in Q4 and then $3.10 in Q1 2010. As for moly, they see $18/lb in Q2 and Q3 09, and than $19 for Q4 and 21 for Q1 2010.
They also provide coverage and price targets for many mining companies but, unfortunately, ML is not cover by them. However, I think that we could pull out a price target for ML using their commodities price forecast and using a 0.60 x P/NAV multiple since it seems a ratio that they would likely use if compare with other companies they cover.
Anyone knows exactly how to calculalte the NAV of a mining company?
Full report avaiable here :
https://www.andrewjohns.ca/assets/sector_calls/Copper_RJ_20090423.pdf
Summary of Commodity Price Changes
Our commodity price outlook has changed little from our Jan-21-09 update.
We emphasize that ultimately we expect an adjustment in the value of fiat
currencies relative to real assets but are not in a position to predict as to when
exactly or the extent. This suggests that copper for example could trade to
US$4.00/lb from US$2.00/lb simply from a simple dislocation in the fiat
currency market, or if pricing for the metals followed from the latest U.S.
accounting standards (mark to model, versus market pricing).Central Banks
typically do not advertise ahead of time that a devaluation is coming, but
given the interventions witnessed to date, we are surprised that more
investors are not taking a more serious look at the Basic Materials sector.