HSBC Says Royal Gold Could Triple Revenue In Next Four Years (RGLD, SLW)
Patrick Chidley, an HSBC equity analyst, initiated coverage on Royal Gold (NYSE: RGLD) today with an "Overweight" rating and $64 price target. During Monday's trading session, RGLD shares have risen 0.72% to $52.08.
The analyst said that the company is poised to triple revenue and quadruple its earnings over the next four years. Royal Gold (RGLD) is not a miner, but rather a gold royalty company, which purchases royalty interests in mining projects. This model is similar to that of Silver Wheaton (NYSE: SLW), which is a high-flying silver royalty company.
The advantage of investing in precious metals via royalty companies versus buying miners or bullion is that they are not encumbered by rising costs, and are not as dependent on rising gold and silver prices.
“The key difference, then, between a royalty company and a mining company is that royalty companies participate in revenue derived from mining at a property without being exposed to production costs, whereas producers benefit from margins, and must manage costs,” Chidley writes.
