Gold (GCQ24) prices have rallied recently, driven by elevated geopolitical turmoil and uncertainty surrounding rate cuts this year. Additionally, the massive gold demand from central banks worldwide has further intensified upward pressure on gold prices.
With investors flocking to gold as a potential safe haven, Goldman Sachs (GS) analysts predict the precious metal’s price to rise by another 14%, reaching $2,700 per ounce by the end of 2024. Considering the bullish market conditions, it might be an opportune time to load up on shares of gold mining stock Eldorado Gold Corporation (EGO).
The stock has demonstrated strong performance over the past year, outpacing the broader market, and is currently trading slightly below its 52-week high of $16.69, achieved last month. Moreover, RBC Capital Market believes Eldorado Gold is perfectly poised to ride the wave of surging gold prices and outshine its competitors.
About Eldorado Gold Stock
Founded in 1996 and headquartered in Vancouver, Canada, Eldorado Gold Corporation (EGO) is a mid-tier resource extraction company specializing in the mining, developing, and extracting of gold and base metals. Valued at a market cap of $3.3 billion, the company operates four gold mines and a robust pipeline of development projects.
Shares of this gold mining company have rallied 61.8% over the past 52 weeks, overshadowing the broader S&P 500 Index’s ($SPX) gain of 22.9% during the same time frame.
In terms of valuation, the stock is trading at 14.98 times forward earnings, which is lower than the industry median and its own five-year average.
Eldorado Gold’s Mixed Q1 Earnings
Eldorado Gold’s shares surged 3.1% on April 25 after the company reported its Q1 earnings results. The company's revenue climbed 13.3% year over year to $258 million, but failed to meet forecasts. Despite this top-line miss, adjusted EPS of $0.27 jumped a whopping 200% annually, smashing projections by a remarkable margin of 80%.
Furthermore, gold production for the quarter totaled 117,111 ounces, up 5% year over year, meeting management expectations. This positive performance was driven by strong contributions across most sites, with production at Lamaque and Olympias leading the charge, showing annual production increases of 12% and 14%, respectively.
Commenting on the company’s Q1 performance, Eldorado Gold’s President and CEO, George Burns said, “We reached a significant milestone on March 31, 2024 as we celebrated our fifth anniversary of achieving commercial production at our Lamaque Complex in Quebec. Since completing construction on time and on budget we have produced 848,014 ounces of gold which exceeded our initial expectations for gold production by 32% compared to the initial pre-feasibility study of 644,100 ounces.”
For fiscal 2024, the company expects its annual gold production to range between 505,000 ounces and 555,000 ounces. Also, total cash costs are forecasted to be between $840 per ounce sold and $940 per ounce sold.
Analysts tracking Eldorado Gold project the company’s profits to reach $1.09 per share in fiscal 2024, up 91.2% annually.
Eldorado Gold Reports Progress on Skouries Project
Situated on the Halkidiki Peninsula in northern Greece, the Skouries project represents a world-class asset. Employing a combination of conventional open-pit and underground mining methodologies, this high-grade gold-copper porphyry deposit is slated for a production lifespan of approximately 20 years. Plus, upon completion, the project is anticipated to yield an average annual output of nearly 140,000 ounces of gold.
In its Q1 earnings results, Eldorado Gold highlighted substantial progress on the Skouries project. Growth capital investment in the Skouries project totaled $52.5 million, bringing the cumulative investment to $237 million against the overall project budget of $920 million.
As of March 31, Phase 2 of the project has achieved a completion rate of 43%, with the overall project, inclusive of the first construction phase, reaching 73% completion. Notably, detailed engineering undertaken since project resumption stands at 67% complete, while procurement activities are nearing finalization.
What Do Analysts Expect For Eldorado Gold Stock?
On May 29, RBC Capital Market analyst Michael Siperco provided a bullish outlook for Eldorado Gold, upgrading its rating to “Outperform” and raising the price target to $20. This positive outlook was driven by the accelerating construction progress at the Skouries project detailed in Q1, and a diminished risk profile attributed to the surge in gold and copper (HGN24) prices.
This new price target implies potential upside of about 27.7% from the current price levels. Moreover, Siperco expects Skouries production to kick off during Q3 of fiscal 2025. According to the analyst, the conclusion of construction expenditures at Skouries and elevated gold prices could be a major boost to the company’s free cash flow.
Eldorado Gold stock has a consensus “Moderate Buy” rating overall. Out of the 11 analysts covering the stock, four suggest a “Strong Buy,” two advise a “Moderate Buy,” four recommend a “Hold,” and the remaining one gives a “Moderate Sell” rating.
The average analyst price target of $16.75 indicates a potential upside of about 7% from the current price levels. However, the Street-high price target of $21.88 suggests that the stock could rally as much as 39.7%.
On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.