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Goldcorp Reinstated At Outperform By Credit Suisse, Sees Cash Growth To Come

Jim Swanson

In a report published Monday, Credit Suisse analyst Anita Soni reinstated coverage of Goldcorp Inc. (USA) (NYSE: GG) with an Outperform rating and $24 price target, following the sale of the company's stake in Tahoe Resources, Inc. (NYSE: TAHO) for about C$1 billion.

The sale adds liquidity to Goldcorp's balance sheet, and the analyst expects the company to end Q2 with cash worth close to $1 billion, along with $3.8 billion in debt. This increase in cash, as compared to Q1, is expected to help the company narrow the dividend funding gap, while continuing to ramp assets.

"GG increased its credit facility to US$3B from $2B on June 11th and extended the term to June 10, 2020. We est. GG's current $500M/year dividend is covered down to $1,150/oz gold in 2016, assuming no alternative accretive acquisition opportunities arise," Soni stated.

The analyst expects Goldcorp's FC profile to improve in 2017, driven by "(i) higher by-product production at Penasquito; (ii) ramp up of Cerro Negro and Eleonore; and (iii) lower taxes at Pueblo Viejo beginning in 2017," the Credit Suisse report added.

The EPS estimates for the company reflect the stake sale, weaker copper and silver prices and stronger CAD/USD.

Latest Ratings for GG

Date Firm Action From To
Jul 2015 Credit Suisse Reinstates Outperform
Jul 2015 Credit Suisse Reinstates Outperform
Jun 2015 TD Securities Upgrades Buy Action List Buy

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