Source: Streetwise Reports
July 20, 2017 (Investorideas.com Newswire) In resuming coverage of Eldorado Gold following the acquisition of Integra Gold and its Lamaque property, BMO Capital Markets analyst Andrew Kaip looked at the impact of the move, as well as at other factors pressuring Eldorado stock.
In a BMO Capital Markets July 10 research report on Eldorado Gold Corp. (ELD:TSX; EGO:NYSE), analyst Andrew Kaip wrote, "While we view the Integra acquisition as neutral, based on the benefit of future tax synergies and/or demonstrated resource growth, we expect it will take time for ELD to overcome the perception that it overpaid for Integra," adding that "benefits of the acquisition also include a step towards diversifying growth away from Greece. We now expect Canada to contribute ~30% of growth over the next 5 years, compared with Greece at ~60%."
After acquiring Integra on May 15, "shares of ELD have declined 33% versus a 7% decline in the GDX and a flat gold price," Kaip stated. "We typically expect shares of the acquirer to come under pressure as investors arbitrage the deal. However, shares of ELD have continued to underperform relative to peers owing to a number of external events that have placed selling pressure on shares of ELD."
Those external events included "index deletions, Greek arbitration and more recently the production revisions at Kisladag," the report notes, adding the company "would not meet its original 2017 guidance at Kisladag at 230-245koz, due to higher-than-expected cyanide requirements in the heap leach. Revised guidance was established at 180-210koz in 2017, and the company expects to recover gold ounces in 2018 that were deferred from 2017."
Despite the downturn in the stock, "in our view, the move to purchase Integra looks to be well timed, as it begins the process of diversifying jurisdictional risk away from Greece to lower-risk operating countries," Kaip stated.
BMO's investment thesis notes that "While ELD represents a compelling opportunity on valuation relative to peers, the company's capital-intensive and execution-exposed development strategy combined with residual concerns over Greek exposure are likely to leave investors on the sidelines until the company succeeds on delivering on growth."
BMO has a Market Perform rating on Eldorado and a target price of $4.00 per share. The stock is currently trading around $3.13.
1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders
Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact each company directly regarding content and press release questions. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. More disclaimer info: http://www.investorideas.com/About/Disclaimer.asp
Additional info regarding BC Residents and global Investors: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894. Global investors must adhere to regulations of each country.