Why BofA Is Double Downgrading Iamgold

Wayne Duggan

Fri, Aug 7, 2020, 4:08 PM2 min read

In this article:

Gold prices have been on a tear in 2020, but Iamgold Corp (NYSE: IAG) shares lost 5.75% Friday after the company received a Wall Street double downgrade in the middle of a bull market for gold.

The Iamgold Analyst: Bank of America analyst Michael Jalonen downgraded Iamgold from Buy to Underperform and cut the price target from $6.25 to $4.50.

The Iamgold Thesis: The downgrade comes after Iamgold reported second-quarter adjusted EPS of 4 cents on Wednesday, in-line with Wall Street analyst estimates. Revenue for the quarter was $284.6 million, up 15.4% from a year ago.

Iamgold cut its 2020 gold output guidance from a previous range of between 685,000 and 740,000 ounces to a new range of between 645,000 and 700,000 ounces.

“The lower rating and PO are based on a reduction in the target multiple from 1.0x to 0.75x, a function of the Westwood Technical Report (gold reserves lowered 48% to 618,000 ozs) and 2021 guidance remaining under review due to potential COVID-19 impacts,” Jalonen said in the downgrade note.

The analyst significantly reduced his target output for Westwood and cut the mine life estimate for the property to eight years.

View more earnings on IAG

Looking ahead to 2021, Iamgold is targeting gold production of between 760,000-840,000 ounces, but that guidance is reportedly still under review.

Benzinga’s Take: Iamgold shares are up 20.6% year-to-date, lagging the overall 29.7% price gains in gold in 2020.

Competitors like Kinross Gold Corporation (NYSE: KGC), Barrick Gold Corp (NYSE: GOLD) and Newmont Corporation (NYSE: NEM) have all gained more than 50% so far this year.

Here's How Much Investing ,000 In The GLD Gold Fund In 2010 Would Be Worth Today

Latest Ratings for IAG

May 2020	BMO Capital	Maintains		Market Perform
May 2020	Canaccord Genuity	Upgrades	Hold	Buy
Dec 2019	BMO Capital	Maintains		Outperform

View More Analyst Ratings for IAG
View the Latest Analyst Ratings

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Why BofA Is Double Downgrading Iamgold

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