Raymond James Upgrades Alamos Gold On Valuation

In a report issued Friday, Raymond James analysts Phil Russo and Luc Troiani upgrade shares of Alamos Gold Inc AGI to Outperform (from Market Perform) on an attractive valuation, but lower their target price to from $8.00 to $6.00. The new price target implies an upside potential of almost 100 percent.

The Rationale

After the company closed the merger with AuRico Gold Inc AUQ on July 2, the firm felt investors would be better of on the sidelines regarding Alamos. This conservative view was motivated by “uncertainty related to its Turkish assets, Mulatos currently being short of steady-state momentum and with the inclusion of Young Davidson’s ramp-up in the portfolio, as well as, critically, its relative fair-valued pro-forma valuation at the time.”

Related Link: Canaccord Upgrades Alamos Gold, Sees 39% Return Possibility

In a previous note, the firm had noted that, “all of these concerns should, conceivably, be overcome with time, at which point we suspect the stock will have several compelling attributes to offer the incremental investor.”

Since that moment, Alamos’ stock fell –unjustifiably- about 46 percent in two week, versus gold, at 7 percent, and the Market Vectors Gold Miners ETF GDX, which lost 21 percent. So, now trading at a much more attractive valuation, the analysts believe “investors today will benefit in adding positions in Alamos at current levels where the risk/reward profile has swung in their favor.”

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Posted In: Analyst ColorLong IdeasUpgradesPrice TargetCommoditiesMarketsAnalyst RatingsTrading IdeasLuc TroianiPhil RussoRaymond James
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