NEW YORK (TheStreet) -- Shares of Allied Nevada Gold (ANV) plunged 13.74% to $1.76 in morning trading Wednesday after Credit Suisse (CS) - Get Report issued a bearish report on gold through the end of 2015.
The firm said one of its 10 best trade ideas for next year is to short gold. Credit Suisse set a price target of $950 on gold through the end of 2015 and said the precious metal's recent drop below the $1,180 mark indicated the continuation of a bearish trend.
"Gold remains very expensive relative to historical norms, with carrying costs becoming more penal as U.S. interest rates begin to rise," the firm wrote. Credit Suisse added that a strong U.S. dollar would continue to weigh on gold.
Gold futures were down 0.18% to $1,194.90 on Wednesday.
Separately, TheStreet Ratings team rates ALLIED NEVADA GOLD CORP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLIED NEVADA GOLD CORP (ANV) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ALLIED NEVADA GOLD CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ALLIED NEVADA GOLD CORP reported lower earnings of $0.01 versus $0.52 in the prior year. For the next year, the market is expecting a contraction of 2750.0% in earnings (-$0.27 versus $0.01).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 1355.6% when compared to the same quarter one year ago, falling from $4.97 million to -$62.41 million.
- ANV's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.06 is very low and demonstrates very weak liquidity.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ALLIED NEVADA GOLD CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.67%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1300.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: ANV Ratings Report