Market Overview

Royal Gold Has 27% Implied Return, Canaccord Says In Upgrade

Share:
Related RGLD
Is The Rally Over For Gold?
Earnings Preview For Royal Gold
Royal Gold declares $0.265 dividend (Seeking Alpha)

Mining company Royal Gold, Inc (USA) (NASDAQ: RGLD) reported fiscal year 2018 second quarter earnings per share that was broadly in line with the consensus estimate.

The Analyst

Canaccord Genuity analyst Tony Lesiak upgraded Royal Gold from Hold to Buy and increased his price target from $101 to $102, suggesting roughly 27 percent upside potential.

The price target revision was attributed to the positive impact of the new Tax Reform law and the revised assumptions for Mt. Milligan.

The Thesis

On the sales front, weaker-than-expected stream contribution from Rainy River was offset by better-than-expected royalty income from Cortez, Lesiak said in a note.

Following the resolution of the longer-term water issues, the company said operator Centerra expects operations at Mt. Milligan to be back at full capacity in April, the analyst said. However, the analyst said issues other than water also plague this key asset, which accounted for 27 percent of Royal Gold NAV, preventing it from reaching full production in the past.

Citing these lingering concerns, Lesiak remains cautious. The firm now expects Mt. Milligan to operate at 72 percent capacity in the second quarter, at 84 percent in Q3 and at 92 percent in Q4, with sales lagging production, given the typical five-month shipping and revenue recognition lag.

The firm said the reduction in the U.S. corporate tax rate from 35 percent to 21 percent will improve future financial results, while it expects the repatriation tax holiday to provide cash flows for growth.

The Price Action

Shares of Royal Gold are up about 19 percent over the past year.

Reacting to the results, shares were up 3 percent to $83.24.

Related Links:

The Evolution Of Currency: From Gold To Bitcoin

Safety In Gold: Investing For The Long Haul

Latest Ratings for RGLD

DateFirmActionFromTo
Nov 2018BarclaysMaintainsEqual-WeightEqual-Weight
Nov 2018TD SecuritiesDowngradesBuyHold
Oct 2018BarclaysInitiates Coverage OnEqual-Weight

View More Analyst Ratings for RGLD
View the Latest Analyst Ratings

Posted-In: Canaccord Genuity Tony LesiakAnalyst Color Upgrades Price Target Analyst Ratings

 

Related Articles (RGLD)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ACBIKeefe Bruyette & WoodsUpgrades21.0
COTYBMO CapitalUpgrades12.0
ECCOppenheimerDowngrades0.0
VYGRRaymond JamesUpgrades0.0
ATNXJP MorganUpgrades15.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Buckingham Neutral On Delphi With Growth Already Baked In

Positioning For A Rebound In European ETFs