Analyst Actions: Goldcorp Target Cut $4 At Credit Suisse

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Credit Suisse "Great Expectations" - G the 2013 re-rating story?; Lowering Estimates and Target Price to $41 (from $45)

Credit Suisse asks "Is guidance too conservative? An under-promise and over-deliver strategy? The most notable successful execution of that strategy in 2012 was AEM. However, GG's guidance range is not a totally de-risked scenario. 2.55Mozs flat likely would have been, but a 2.55-2.8Mozs range (with some investors expecting closer to 2.8Mozs) is not. We think guidance is reasonable, with downside risk at MW, PCP and PV. Penasquito is appropriate given the grade and water challenges. We see upside at Wharf and El Sauzal, which continue to beat modest expectations. Combined we see a 2.65-2.70Mozs range as the most likely scenario."

"With no rabbit to be pulled out of the hat, is the stock undervalued currently? We get the impression that the market wants, indeed expects, GG to be the 2013 re-rating story. We acknowledge that this level of support is a significant tailwind to the share price and headwind to our Neutral thesis. GG shares have declined 18% since the peak on Nov. 1st, 2012. We note that the GDX also traded down 13% over the same timeframe, thus the 5% underperformance vs. the GDX is a little light compared to the 14% average cut to street target prices and 7% decline in our GG NAV."


"Last, will it re-rate? In our view, when the market expects a re-rate, it's likely already priced in. We believe the market is already baking-in results for 2013 at the top end of GG guidance. We do like the underlying company but don't see it as is undervalued relative to its peers. GG trades at 1.33x P/NAV, in-line with AEM at a premium to the group average."

"We have reduced our TP to $41 (from $45), to reflect the cost increases.

GG (and AUY) adopts "all-in-cost" metric. We would like to highlight our report from August 7th, 2012 comment titled "Shifting gears: From chasing growth to cash return" where-in we revamped all our models and revalued our sector based on a similar metric: OpCF less sustaining capex. We are lowering our 2012/2013/2014 EPS estimates to $1.93/$2.18/$2.75 (from $1.96/$2.59/$2.87) respectively."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

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