Credit Suisse Upgrades Eldorado Gold
- By Alberto Abaterusso
Following positive news from Greece last week, Eldorado Gold Corp. (EGO) received an upgrade from Credit Suisse.
The Swiss firm upgraded the gold miner's shares from underperform to neutral.
Earlier this month, the Candian miner finally received the last building permits and other necessary authorizations it needed from the Greek government, painting a more optimistic outlook for its operations in the Mediterranean country. In addition, it established constructive dialogue with the Ministry of Energy and Environment in regard to Hellas Gold, a subsidiary.
Warning! GuruFocus has detected 3 Warning Signs with EGO. Click here to check it out.
The intrinsic value of EGO
Credit Suisse analyst Anita Soni said the company's future in Greece is "choppy, but improving.
In addition to upgrading the stock, the firm set a new target price of $2.40 per share.
The new target price should drag the average target price of $3.22 per share down a bit to around $3.17, which will represent a 30% to 35% upside in Eldorado's current market value.
The new target price represents a 2.12% upside from the current market value of $2.35 per share.
Eldorado Gold has a market capitalization of $1.82 billion, a price-book (P/B) ratio of 0.44, a price-sales (P/S) ratio of 3.66, a price-earnings (PE) ratio of 288.51 and an EV/Ebitda ratio of 14.58.
Investors can used different methods to evaluate Eldorado Gold's stock, which has gained almost 15% in the last week.
One of these methods is comparing the company's EV/Ebitda ratio to its most direct peers. Another method is comparing Eldorado Gold's EVO - enterprise value per ounce of gold reserves - to the industry average. Eldorado Gold currently has an EVO of approximately $106.42, which is likely one of the lowest in the industry.
The company's third-quarter 2017 EPS are forecasted to be one cent. For the year, EPS is projected to be four cents.
The forecast for third-quarter revenue is $11.26 million, down 4.3% year over year. Full-year 2017 revenue is expected to be $430.92 million, a 0.4% decrease from 2016. For 2018, revenue is projected to increase 63.5% to $704.75 million.
More positive news from Greece - like reaching a resolution to the pending arbitration charges from the government - will be a catalyst for the company's market value.
Disclosure: I have no positions in Eldorado Gold Corp.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 3 Warning Signs with EGO. Click here to check it out.
The intrinsic value of EGO
