Morgan Stanley Says Take Profits In Randgold, Downgrades To Equal-Weight


27% profits every 20 days?

This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.


Morgan Stanley’s Dan Shaw downgraded the rating on Randgold Resources Ltd. (ADR) (NASDAQ: GOLD) from Overweight to Equal-Weight, while raising the price target from GBp3,990 to GBp5380.

Time to Take Profits

Shaw mentioned that following the 53 percent year-to-date appreciation in share price, the time was right to take profits.

The analyst explained that the stock appeared fully valued, implying metal prices “far above spot leaving their risk-rewards skewed to the downside.”

According to the Morgan Stanley report, the stock is pricing in gold price at $1,890/oz, or using spot prices and “working back” to the share price suggests that the market is accounting for a discount rate of 1 percent.

“However, the company has a net cash balance sheet and an excellent track record of developing gold mines while maintaining a strict capital allocation discipline, which keeps us Equal-weight,” the report stated.

Best In Class

Gold and silver prices have risen 16 percent and 17 percent year-to-date, respectively. With this, exposed stocks have also meaningfully rallied, although some stocks now appear expensive.

The analyst believes that Randgold Resources continues to be best-in-class in the sector, with lowest cost assets and a robust balance sheet. The company continues to also be one of the most liquid names in the sector, with significant exposure to precious metal pricing.


27% profits every 20 days?

This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.


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Posted In: Analyst ColorDowngradesPrice TargetAnalyst RatingsDan ShawMorgan Stanley