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Analyst Actions: Goldcorp Downgraded To Neutral, Target Cut $13 at Credit Suisse - "Another Challenging Year Ahead"

Another challenging year ahead; DOWNGRADING To NEUTRAL (from Outperform); Revising Ests & Lowering TP to $45 (from $58)

Target price revised to $45 (from $58), rating revised to Neutral (from Outperform). Credit Suisse target price is reduced on lower cash flow in 2013 and lower NAV based on revised estimates for Penasquito and PV, and on lower multiples (NAV and OpCFa) for GG based on lower near-term growth.

Goldcorp guidance in early January, likely negative: We continue to see near-term headwinds for GG with a likely capex increase and a reduced production growth profile near term. GG shares have declined 19% since November 1, but have only underperformed the TSX Global Gold Index by 4%. We are concerned that the market does not fully understand Penasquito issues are twofold: static throughput and lower grades in 2013 and 2014.

Credit Suisse estimates revised from 2.77Mozs to 2.73Mozs (trimmed 1.6%). Goldcorp last issued five-year guidance on January 9, 2012. We note that GG's revised production forecast for 2013 is likely to differ from its original plan on (i) Penasquito; (ii) Red Lake; (iii) Pueblo Viejo; and (iv) Cerro Negro.

Capital project budgets also under pressure: Cerro Negro in Argentina (GG: $0.8B, Credit Suisse: $1.36B (unchanged)) as the most likely to see a pre-production capital cost increase tied to the delay in start-up to late 2013/early 2014 and labor cost escalation. Cochenour (GG: $0.42B, Credit Suisse: $0.58B) could also see some capex escalation. This will likely be partially offset by El Morro capex deferrals.

Investment Thesis: Once GG issues revised guidance, there may likely be a buying opportunity as we expect GG will set upon a path of delivery vs. rebased expectations. However, we prefer to be on the sidelines in advance of that. We continue to like GG's suite of assets, cost structure and long-term growth profile but believe that it is currently fairly priced given the potential negative downside risk.

EPS revised down in FY13/14 on changes outlined above. We are revising ur 2012/2013/2014 EPS estimates to $1.96/$2.59/$2.87 (from $1.92/$2.60/$3.32) respectively.

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

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

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