NEW YORK (TheStreet) -- Goldcorp (GG - Get Report) stock coverage was reinstated by Credit Suisse with an "outperform" rating and a price target of $24 after Goldcorp sold its stake in Tahoe Resources (TAHO for about $765 million.
The sale will increase Goldcorp's cash to $1 billion, which will allow the company to grow its assets while closing the dividend funding gap, according to analysts.
The firm also expects the mining company's free cash flow to increase 10% over the current market cap by 2017, due to higher production and lower taxes.
Additionally, Credit Suisse sees gold prices increasing from the current $1,164.50 an ounce to $1,225 an ounce in the third quarter of 2015, and to $1,250 an ounce in the fourth quarter as demand surges in Asia.
Goldcorp shares are currently up 1.02% to $16.34.
Separately, shares of GOLDCORP INC (GG) stock were up today by $0.3 (1.89%) as of the close of trading. By the end of trading, 4.91 million shares of GOLDCORP INC exchanged hands as compared to its average daily volume of 6.87 million shares. The stock ranged in price between $15.92 to $16.22 after opening the day at $15.95 as compared to the previous trading day's close of $15.88. Overall, GOLDCORP INC lagged the S&P 500 which was up 1.89%. Important items of note for GOLDCORP INC and possible rationale for parts of today's stock move go as follows:
TheStreet Ratings team rates GOLDCORP INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOLDCORP INC (GG) a SELL. This is driven by some concerns, 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, weak operating cash flow and generally disappointing historical performance in the stock itself."
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 188.8% when compared to the same quarter one year ago, falling from $98.00 million to -$87.00 million.
- Net operating cash flow has significantly decreased to $58.00 million or 78.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.59%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 254.54% 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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Metals & Mining industry and the overall market, GOLDCORP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 39.04% is the gross profit margin for GOLDCORP INC which we consider to be strong. Regardless of GG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GG's net profit margin of -8.55% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: GG Ratings Report