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Canaccord Upgrades Alamos Gold, Sees 39% Return Possibility

Javier Hasse

Shares of Alamos Gold Inc (NYSE: AGI) are up more than 2.7 percent on Friday, following an upgrade at Canaccord. In a report, analysts Rahul Paul and Alex Pernin boosted their rating from Hold to Buy, while trimming their price target from C$9.00 to C$8.50.

The new rating and price target seek to reflect the recent share price weakness (the stock fell more than 31 percent year-to-date, and more than 13 percent over the past week), which has created the opportunity for a 39 percent upside.

Related Link: 5 Junior Gold Miners Trading At Less Than 0 Per Ounce

After the company merged with its equal AuRico Gold Inc (NYSE: AUQ), the analysts at Canaccord started viewing the MergeCo as a “higher-quality intermediate gold producer, combining Alamos' strong balance sheet, AuRico's attractive asset base (underpinned by the Young-Davidson mine in Ontario) and Alamos' current growth pipeline.”

At current valuations, the experts see potential for additional multiple expansion at Alamos, longer term, based on:

1) The successful overhaul at the San Carlos underground operation.

2) The concession of the forestry and operating permits necessary for the Turkish assets to operate.

3) An ameliorated consolidated cash cost profile, which in part responds to the start of production at the La Yaqui and Cerro Pelon satellite deposits.

Latest Ratings for AGI

Date Firm Action From To
Jul 2015 Canaccord Genuity Upgrades Hold Buy
Jul 2015 Raymond James Maintains Market Perform
Jun 2015 Desjardins Upgrades Hold Buy

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