Citi Upgrade With gold stocks having been “hit hard” by the recent market selloff, Citi analyst Alexander Hacking sees “an opportunity for investors to accumulate.”
“Citi’s commodity team is broadly bullish on gold expecting prices to rebound above $1900/oz by mid-2023,” he said. “Gold has held above $1600/oz despite real yields moving about 1.5 per cent (normally associated with $1200/oz) – which is also a bullish sign, in our view.”
Seeing Agnico Eagle Mines Ltd. as “the highest quality name in the space with high quality assets and a strong management team,” Mr. Hacking upgraded his recommendation for its shares to “buy” from “neutral” based on valuation.
“The stock is trading close to 5-year lows and at a similar P/NAV to NEM,” he said. “Citi commodity team is mid-term bullish on gold expecting the price to recover to $1,900/oz by 2H23. “If $1600/oz ends up being the floor during an aggressive Fed hike cycle, then this resets gold’s trading range to a very attractive level.”
After reducing his 2022 EBITDA estimate by 16 per cent and increasing his 2023 estimate by 10 per cent, Mr. Hacking lowered his target for Agnico shares to US$50 from US$72. The average on the Street is US$64.51.