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Shares of Silver Wheaton Corp. (NYSE: SLW) plunged to a new 52-week low of $15.18 on Tuesday after the company received a proposal letter from the Canadian Revenue Agency (CRA) in which it argued the company's profits earned by foreign subsidiaries should be subject to tax in Canada.
The CRA noted that Silver Wheaton's tax obligation during the 2005 to 2010 time period should be increased by $567 million on top of transfer penalties of $57 million. Taxation years after 2010 remain open to an audit.
In a report published Tuesday, Toronto-based CIBC analyst Cosmos Chiu suggested that the market has already priced in a "worst-case scenario" as the CRA's initial audit notice actually dates back to March 2012. Chiu said that based on a 10 percent discount rate, shares are trading at 1.7x P/NAV, in-line with its peers.
Shares remain Sector Outperform with an unchanged $31 price target.
BMO: Negative Impact ‘Already Factored In'
Toronto-based BMO Capital Markets analyst Andrew Kaip also commented on Silver Wheaton's CRA letter.
According to Kaip, Silver Wheaton is likely to "vigorously" defend its position which could result in a "protracted timeframe.
Nevertheless, Kaip added his "mixed" views. On the positive end, the CRA's announcement now provides clarity on the potential impact to the company. On the other hand, the CRA's reassessment could have implications for income earned after 2010, which could be around $440 million.
Kaip further suggested that when taking into account the 11 percent decline in share prices on Tuesday, the negative impact of the CRA letter is now "imputed" in its share price.
Shares remain Outperform rated with a price target lowered to $20 from a previous $25 as owning shares provides investors with exposure to superior growth and higher operating margins versus its silver producing peers.
Latest Ratings for SLW
Date | Firm | Action | From | To |
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Jul 2015 | JP Morgan | Maintains | | Overweight | May 2015 | Canaccord Genuity | Initiates Coverage on | | Buy | Mar 2015 | Raymond James | Reinstates | | Outperform |
View More Analyst Ratings for SLW
View the Latest Analyst Ratings
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VanEck Vectors Global Alternative Energy ETF
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PRODUCER |
CODE : SLW.TO |
ISIN : CA8283361076 |
CUSIP : 828336107 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Silver Wheaton is based in Canada. Silver Wheaton produces silver, copper, gold, lead, silica and zinc in Canada, in Greece, in Mexico, in Peru, in Portugal and in Sweden, develops copper, gold, silver and zinc in Canada and in Chile, and holds various exploration projects in Argentina and in Portugal. Its main assets in production are ZINKGRUVAN in Sweden, KENO HILL (BELLEKENO) and MINTO MINE in Canada, SAN MARTIN - LUISMIN, PEÑASQUITO, LUISMIN and G-9 CAMPO MORADO in Mexico, YAULIYACU in Peru, STRATONI in Greece and NEVES-CORVO in Portugal, its main assets in development are PASCUA LAMA in Chile and KUTCHO CREEK in Canada and its main exploration properties are PROMOTORIO DURANGO and MONTOROS in Mexico, ALJUSTREL in Portugal and LOMA DE LA PLATA (NAVIDAD) in Argentina. Silver Wheaton is listed in Canada, in Germany and in United States of America. Its market capitalisation is 1.4 billions as of today (US$ 992.0 millions, € 902.8 millions). Its stock quote reached its lowest recent point on March 09, 2007 at 10.01, and its highest recent level on May 15, 2017 at 28.53. Silver Wheaton has 47 442 200 shares outstanding. |