Agnico Eagle Mines Ltd. (AEM) found its shares absolutely battered on Thursday after the company's earnings and production report. We have seen one analyst defend the stock so far: Sterne Agee's Michael Dudas. Unfortunately, the news and trading action is going against the shareholders more than one analyst defending call can prevent.
Agnico reported earnings per share of $0.28 on an adjusted basis. This was under the $0.31 per share consensus estimate from Thomson Reuters. Second-quarter gold production was 326,000 ounces. Agnico's second-quarter cash costs were $626 per ounce, but the firm had a slightly lower gold realization price.
Sterne Agee's Michael Dudas reiterated his Buy rating on Agnico and he maintained his $48 price target. Keep in mind that this would have been a call for almost 20% upside from the $40.76 closing price, but a post-earnings reaction sent shares down more than 8% to $37.45 by late morning trading on Thursday. This implies potential upside of 28% now.
With the completion of the Osisko acquisition, Agnico has raised its 2014 gold production guidance to a range of 1,350 1,370 koz, including nearly 125 koz from Canadian Malartic. The call signaled that recent drillings are expected to expand gold resources at Pump, Wesmag/Normeg and Wolf deposits at Meliadine.
Dudas said in his call:
Agnico shares should continue to outperform as a leading, well-managed mining equity. While second quarter estimates were off on slightly lower metal price realizations and other line items, management raised 2014 production and lowered cost guidance on continued strong performance and the Osisko acquisition completion. Mid-year exploration update signals potential for resource expansion at Meliadine and Kittila. We believe the company has managed the down cycle effectively. We would add to positions.
Agnico Eagle Mines shares were at $37.45 after just over an hour of trading on Thursday, and the stock had traded almost a full day's average trading volume over 1.8 million shares. The 52-week range is $23.77 to $42.41, and the consensus analyst target price is $40.30. We would point out that the highest analyst price target is up at $50.00.