"Our target price of $24 is based on an even weighting of our $21 OpCFa valuation and $27 NAV valuation. We apply a 22x multiple to FY15/16E OpCFa of 95 cents per share. Our NAV valuation is based on 1.7x our DCF of $16.84 with net cash and marketable securities of $(3.19) added at par," analysts said.
"Our OpCFa is based on implied mine life and free cash flow generating ability" they noted.
"We believe there are several risks to Goldcorp's achievement of our target price. Goldcorp is subject to commodity price and foreign exchange risk as fluctuations in the gold price or foreign exchange rates will impact Goldcorp's profitability," analysts continued.
Additionally, analysts detailed risks including "inflationary pressures particularly for fuel, consumables, equipment and labour, fluctuations in ore grade and recovery rates or changes to the mining sequence [that could] impact production and cost forecasts, and [exposure] to development risk as [Goldcorp] brings the Peñasquito mine to full capacity and develops its pipeline of growth projects."
Gold futures for February delivery were down 0.8% to $1,198 an ounce at 12:44 p.m. on the COMEX in New York.
Gold futures posted the longest slump in five weeks yesterday on concern that the Federal Reserve is moving closer to raising U.S. interest rates, crimping demand for the precious metal as an alternative investment. according to Bloomberg.