NEW YORK (TheStreet) -- Kinross Gold Corp. (KGC - Get Report) closed down 3.7% at $2.61 after Credit Suisse had downgraded the company to "neutral" from "outperform" and lowered its price target to $3.25 from $3.75.
"Our lower target price incorporates our revised commodity price deck. KGC is downgraded on relative valuation following its strong 20% plus outperformance vs. peers since November 1," analysts' noted.
"We continue to view KGC as a strong FCF generator assuming it does not pursue a Tasiast expansion in the near term. However, geopolitical headwinds (43% of NAV) remain an overhang," analysts' continued.
"Kinross is subject to commodity price and foreign exchange risk as fluctuations in the gold price or foreign exchange rates will impact Kinross profitability. Kinross is subject to inflationary pressures particularly for fuel, consumables, equipment and labor," they added.
Gold futures for February delivery were down 0.93% to $1,196.50 an ounce at 4:16 p.m. on the COMEX in New York.
Separately, TheStreet Ratings team rates KINROSS GOLD CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate KINROSS GOLD CORP (KGC) 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 unimpressive growth in net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 112.2% when compared to the same quarter one year ago, falling from $41.90 million to -$5.10 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.48%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 100.00% 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.
- KINROSS 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, KINROSS GOLD CORP reported poor results of -$2.64 versus -$2.23 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus -$2.64).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, KINROSS GOLD CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- 43.61% is the gross profit margin for KINROSS GOLD CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.53% is in-line with the industry average.
- You can view the full analysis from the report here: KGC Ratings Report