The Toronto-based mining company's cash pile is dwindling and the status of it remains in question, the firm said.
"With the clock ticking on utilizing the cash before it must be spent on debt ($650m outstanding) repayment, we see cash deployment risk on the rise," the analysts said.
IAMGOLD will likely hit its production and costs plan in 2015, but its plan implies that the company will continue losing money on a cash basis, the analysts added.
"IMG is one of the companies in our coverage universe which is the least likely to benefit from weaker producer currencies and energy prices given the location of its assets and poorly timed hedging program," Canaccord analysts said.
Shares of IAMGOLD were down 4.43% to $1.94 in early afternoon trading on Wednesday.
heStreet Ratings team rates IAMGOLD CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate IAMGOLD CORP (IAG) a SELL. This is driven by multiple 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 poor profit margins, 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 gross profit margin for IAMGOLD CORP is currently lower than what is desirable, coming in at 28.30%. It has decreased from the same quarter the previous year.
- Net operating cash flow has significantly decreased to $31.70 million or 67.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- IAG has underperformed the S&P 500 Index, declining 16.00% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has decreased by 23.1% when compared to the same quarter one year ago, dropping from -$16.00 million to -$19.70 million.
- 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, IAMGOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: IAG