Mining Stocks 2Q Review
In early August of 2011 many investment firms released their predictions for market trends during the second Quarter of that year. The following is some of their recommendations to clients as well as their overall opinion of mining stocks.
They predicted that there would be no major changes to the price deck. They were marking to market their metal price deck for the most recent quarter and updating their companies under coverage. They kept their PGM metal price forecasts relatively unchanged since their July 2011 industry update. Their LT platinum, palladium and rhodium prices remained at US $1,600/oz, US $600/oz and US $3,200/oz, respectively. Their long term ZAR/USD assumption also stayed unchanged at 7.75, gradually weakening from 6.72 from 2012-2013E. For uranium prices, they also kept steady forecasts. Gold production and silver price forecasts were updated by Brad Humphrey on Aug-03-11.
Key changes to targets/interest rates were made and are as follows. On HAT, they lowered their rating to Market Perform (from Outperform) and decreased their target to $3.70 (from $3.90). This downgrade was based on share price appreciation at the time, whereas, the lowered target reflected minor model adjustments. On DML, they maintained their market perform rating, but, lowered their target to $2.00 (from $2.50). Their lowered target reflected a compressed multiple given lackluster exploration results from Wheeler River at the time.
Beats and Misses on Quarter. They expected CCO to beat consensus EPS (C$0.20 vs. C$0.18) whereas, they forecasted that most of their other companies would miss consensus slightly. They estimated that the largest miss was likely to be FIU (-US$0.05 vs. -US$0.02), although weak quarterly results were likely already priced into the stock. They estimated that ELR would be in-line (-US$0.01).
