On Friday, Jefferies updated its stance on Royal Gold (NASDAQ:RGLD) shares, increasing the price target to $141 from $130 while maintaining a Hold rating on the stock. The firm anticipates that Royal Gold will report higher quarter-over-quarter earnings and cash flow before working capital changes.
This outlook is based on pre-released stream sales figures that exceeded those of the first quarter, along with expectations that gold equivalent sales from royalty interests will stay relatively consistent with the previous quarter.
The forecast suggests that gold equivalent ounce (GEO) sales should be more concentrated in the latter half of the year, with approximately 52% expected in the second half.
This is attributed to anticipated stronger production from the Pueblo Viejo and Rainy River operations. As a result, earnings and cash flow for Royal Gold are projected to rise sequentially over the next three quarters.
The firm's analysis also indicates that Royal Gold is on track to meet its full-year GEO sales and tax guidance. Contributing to this positive outlook are the elevated grades from the Xavantina mine and the expected increase in throughput at Pueblo Viejo, which is believed to have begun in the second quarter. These factors combined underpin the rationale for the revised price target and the continuation of a Hold rating on Royal Gold shares.
In other recent news, Royal Gold, Inc. reported a robust Q1 2024, with significant revenue growth. The company's financial results showed $149 million in revenue, an operating cash flow of $138 million, and earnings of $47 million, or $0.72 per share.
Adjusted earnings were reported at $0.91 per share. The company's focus on precious metals paid off, with 75% of its revenue generated from gold and 88% from precious metals overall.
Royal Gold also made noteworthy strides in debt reduction and liquidity enhancement, with nearly $1 billion in total liquidity by the end of the quarter. The company extended the mine life of Mount Milligan to 2035 through an agreement with Centerra and completed the acquisition of Khoemacau with total proceeds of $37 million. Despite a decrease in net income due to lower revenue and a one-time discrete tax expense, Royal Gold remains in a strong financial position.
These are among the recent developments for Royal Gold, which continues to show promise in its operations and financial management. The company expects to maintain this momentum, supported by a pipeline of opportunities in the transaction environment.
InvestingPro Insights
InvestingPro data highlights Royal Gold's (NASDAQ:RGLD) robust financial metrics, with a significant gross profit margin of 84.89% over the last twelve months as of Q1 2024, reflecting the company's strong profitability. Additionally, the company's market capitalization stands at $8.93 billion, and it trades at a price-to-earnings (P/E) ratio of 40.03, indicating investor confidence in its earnings potential. Despite a slight decrease in revenue growth by 4.46% over the last twelve months as of Q1 2024, Royal Gold has maintained a healthy dividend yield of 1.18%.
Among the InvestingPro Tips, a notable mention is that Royal Gold has raised its dividend for 8 consecutive years, which aligns with Jefferies' positive outlook on the company's earnings and cash flow. Furthermore, with 3 analysts having revised their earnings upwards for the upcoming period, the company's financial trajectory appears promising. To delve deeper into the company's performance and discover additional InvestingPro Tips, interested investors can visit https://www.investing.com/pro/RGLD. For those seeking comprehensive analytics, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 12 more InvestingPro Tips available, investors can gain valuable insights into Royal Gold's strategic position and market performance.
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