In a report issued Friday, Raymond James analysts Phil Russo and Luc Troiani upgraded shares of Alamos Gold Inc (NYSE: AGI) to Outperform (from Market Perform) on an attractive valuation, but lowered their target price to from $8.00 to $6.00. The new price target implies an upside potential of almost 100 percent.
The Rationale
After the company closed the merger with AuRico Gold Inc (NYSE: AUQ) on July 2, the firm felt investors would be better off on the sidelines regarding Alamos. This conservative view was motivated by “uncertainty related to its Turkish assets, Mulatos currently being short of steady-state momentum and with the inclusion of Young Davidson’s ramp-up in the portfolio, as well as, critically, its relative fair-valued pro-forma valuation at the time.”
Related Link: Canaccord Upgrades Alamos Gold, Sees 39% Return Possibility
In a previous note, the firm had noted that, “all of these concerns should, conceivably, be overcome with time, at which point we suspect the stock will have several compelling attributes to offer the incremental investor.”
Since that moment, Alamos’ stock fell –unjustifiably- about 46 percent in two weeks, versus gold, at 7 percent, and the Market Vectors Gold Miners ETF (NYSEARCA:GDX), which lost 21 percent. So, now trading at a much more attractive valuation, the analysts believe “investors today will benefit in adding positions in Alamos at current levels where the risk/reward profile has swung in their favor.”
Latest Ratings for AGI
| Date | Firm | Action | From | To |
|---|
| Jul 2015 | Raymond James | Upgrades | Market Perform | Outperform |
| Jul 2015 | Canaccord Genuity | Upgrades | Hold | Buy |
| Jul 2015 | Raymond James | Maintains | | Market Perform |
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