Agnico Eagle Mines (AEM) stock forecast: What’s next for the miner?
Agnico Eagle Mines is a Canadian gold mining company that’s been working with precious metals for more than 60 years.
The Toronto-based company has mines in Canada, Finland and Mexico. It also has exploration activities in each of these regions, as well as in the US and Colombia.
How has Agnico Eagle’s stock performed?
Let’s start with the AEM stock analysis. Investors have had a mixed experience.
Over the last five years, for example, the stock has risen 26%, up from $41 to $51.66, as of 24 November 2021.
However, it’s been less impressive over shorter time periods. Year-to-date, the price has fallen 31% from the $63.80 level of January 2021.
The stock rose 16% to $57.91 in the weeks following Agnico’s announcement in late September that it had agreed a “merger of equals” with Kirkland Lake Gold Ltd.
However, the stock price has since given back most of those gains, falling by around 11% since mid-October.
Impressive dividend history
Agnico Eagle has declared a cash dividend every year since 1983. Most recently, the company’s board announced a quarterly cash dividend of $0.35 per common share, payable on 15 December 2021 to shareholders of record, as of 1 December 2021.
Pursuant to tax legislation, residents of Canada who receive eligible dividends will be entitled to an enhanced gross-up and dividend tax credit on any dividends.
“In February 2020, we marked our 38th consecutive year of paying dividends, with cumulative dividends of $1.4bn paid since 1983,” the company stated.
In October 2020, the company announced a 75% increase in its quarterly dividend, rising from $0.20 a share to $0.35 a share. Its stated aim is to continue increasing dividend payments over time.
Latest results reveals net income fall
The latest AEM stock news came on 27 October 2021, when the company reported third-quarter net income of $114.5m for the third quarter – almost 50% ($108.2m) lower than the $222.7m achieved in the corresponding period in 2020.
The Canadian miner attributed the fall to factors such as lower operating margins, lower average realised metal prices and higher production costs, partially offset by higher sales volumes.
The company cited unrealised losses for non-cash items related to mark-to-market adjustments on financial instruments and higher amortisation of property.
Agnico Eagle also highlighted plant and mine development from higher production volumes, the contribution of the Hope Bay mine and higher exploration expenses.
According to the results, cash provided by operating activities was $1.054bn for the first nine months of 2021 – up on the $788.5m over the same period in 2020.
The company primarily attributed this to an increase in operating margins, partially offset by higher cash taxes related to higher mine operating margins. It also cited the impact of payments for taxes related to the 2020 tax year in the first quarter of 2021.
Record gold production
Payable gold production (defined as the quantity produced that has been or will be sold by the company during the period) hit 523,706 ounces in the third quarter.
This figure excluded 17,957 ounces of payable gold production at Hope Bay, but included pre-commercial gold production of 6,881 ounces at the Tiriganiaq open pit at Meliadine.
Payable gold production, including Hope Bay, hit a new record of 541,663 ounces at production costs per ounce of $845, total cash costs per ounce of $784 and AISC per ounce of $1,059.
Agnico also revealed the LaRonde Complex, Goldex and Canadian Malartic mines in the Abitibi region of Quebec collectively produced 222,373 ounces of gold. This was achieved at production costs per ounce of $716 and total cash costs per ounce of $594.
In a video update accompanying the results, Agnico’s chief executive, Sean Boyd, said the performance sets up a record production for the year’s second half.
He pointed out that this would also put the company on track to hit its 2021 guidance and “allows us to generate” significant cash flow.
He insisted that combining the two companies would result in $2bn of synergies being extracted over a 10-year period and reward shareholders in both businesses.
Agnico Eagle Mines (AEM) stock forecast
Analysts’ recommendations point to a bullish Agnico Eagle Mines stock prediction. According to data collected by MarketBeat, the consensus rating on the stock is ‘buy’, based on the views of nine industry analysts. Five analysts classed it as ‘buy’ and four rated it a ‘hold’.
Their average AEM share price target for the coming year is $91.07 – that would represent a 76.29% potential upside over today’s $51.66 price, as of 24 November 2021.
The highest forecast came in at $121.50, which would be a 135% increase over the current price level. Even the most pessimistic forecast sees the stock rising 22% to $63.
AEM stock is rated by analysts from KeyCorp, Royal Bank of Canada, JP Morgan and BMO Capital Markets, among others. It has received two downgrades and one upgrade in the past 90 days.
However, the algorithmic forecaster Wallet Investor suggests a far more modest Agnico Eagle stock forecast, with the stock to reach $59.12 over the next 12 months.
The site, which predicts future values using technical analysis, suggests the company is a “good long-term (one year)” investment.
Over the longer term, AEM stock is expected to reach $65.58 by November 2023 and $71.72 a year later in November 2024.
Wallet Investor suggests that the price will increase to $77.86 by November 2025. Its five year AEM stock price target is $83.63 – 62% higher than the current (24 November) $51.66 level.
Note that predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
According to Danni Hewson, financial analyst at AJ Bell, investors’ traditional relationship with gold has been challenged over the past year.
She pointed out that as the “dial swings towards rate rises”, many gold operators have seen their share price fall.
Hewson believes collaboration could provide opportunities for streamlining both businesses, cutting costs and increasing profits.
In a recent broker note, Tyler J. Langton, an analyst at JP Morgan, also gave an upbeat assessment of Agnico Eagle’s stock forecast.
Looking to 2022, Langton expects production to increase by about 3% year-on-year, with cash costs up around 5%.
In terms of the AEM share price forecast, the analyst boosted the price target from $65 to 67 to “reflect slightly lower cost forecasts” in 2022 estimates. He also believes the Kirkland Lake merger is positive.
Is AEM stock a good buy?
This will depend on your analysis. Investors should look at the company’s figures and listen to its statements to assess its performance and likelihood of achieving analysts’ targets over various time horizons.
Will AEM stock go up or down?
Analysts are forecasting that AEM stock will rise over the coming year, but there are no guarantees. Their predictions can be wrong. It’s essential that you carry out your own independent research and draw your own conclusions.
Should I buy AEM stock?
Whether AEM stock is a suitable investment for you will depend on your personal circumstances, investment objectives and attitude to risk. You will also need to research the company and use this information to decide whether it meets your needs.
Read more: Evergrande Group stock forecast: will it manage to reverse default?
Markets in this article