Credit Suisses Anita Soni believes gold prices would be supported by ETFs via macro factors, such as a more dovish Fed, central bank buying, physical demand and declining supply.
The analyst upgraded the rating on Eldorado Gold Corp (USA) (NYSE:EGO) from Neutral to Outperform, while raising the price target from $3.25 to $4.00.
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Potential For Upside
Although the stock underperformed its peers by 50 percent year-to-date in 2016, as well as pricing in potential further downside with a weaker Q1 and Skouries technical report likely to miss street expectations, Soni believes there could still be potential for meaningful upside.
With Eldorado Gold having underperformed over the last 15 months, Soni believes negative drivers have now been adequately priced in, including Greece headwinds, productions decline in 2016 from the 2015 levels and reserve declines and the subsequent writedowns.
Soni believes that apart from Eldorado Golds robust production and growing base, several positive catalysts to the stock could be in the offing, such as rising gold prices, EIA approval for Skouries, Skouries development being restarted and maximization of the value of the companys Chinese assets.
The analyst pointed out that even if Skouries and Olympias remain on hold, and Eastern Dragon is delayed and with a revised outlook for Kisladag in 2019, EGO still provides modest production growth from 2016 to 2019.
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