BMO lifts Franco-Nevada stock target to Cdn$261 on Côté royalty deal

Published 28/05/2025, 15:26
BMO lifts Franco-Nevada stock target to Cdn$261 on Côté royalty deal

On Wednesday, BMO Capital Markets updated its outlook on Franco-Nevada Corporation (FNV:CN) (NYSE: FNV), increasing the price target to Cdn$261 from the previous Cdn$260 while maintaining an Outperform rating on the stock. Currently trading at $169.02 with a market capitalization of $32.56 billion, the stock appears overvalued according to InvestingPro Fair Value metrics. The upgrade follows Franco-Nevada’s acquisition of a royalty on the Côté gold project, which is expected to enhance the company’s asset portfolio with a long-duration gold asset in a politically stable region.

Matthew Murphy, an analyst at BMO Capital, highlighted the strategic value of the Côté royalty acquisition for Franco-Nevada. With an impressive gross profit margin of 89.17% and a strong financial health score rated as "GOOD" by InvestingPro, the company appears well-positioned for this expansion. He noted that the deal checks several important criteria for the company, including the addition of a growth-oriented asset as the mine ramps up production. Murphy also mentioned that while the spot internal rate of return (IRR) is seen as acceptable, further details from IAMGOLD (NYSE:IAG)’s forthcoming mine plan could provide additional insights into the asset’s potential.

The Côté gold project, located in a secure jurisdiction, is anticipated to bolster Franco-Nevada’s growth profile. This optimism is reflected in the slight increase in the price target set by BMO Capital. The updated mine plan from IAMGOLD, which is expected in early 2026, will offer a more comprehensive perspective on the potential for a superpit scenario, potentially impacting Franco-Nevada’s valuation and future prospects.

Franco-Nevada’s stock price adjustment comes as the company continues to focus on long-term growth and sustainability through strategic acquisitions and investments. With the Côté gold project royalty now part of its portfolio, the company is poised to benefit from the project’s ramp-up and the stable geopolitical environment in which it operates.

BMO Capital’s revised price target reflects a modest but positive reassessment of Franco-Nevada’s investment appeal following the Côté royalty acquisition. The stock has shown strong momentum with a 43.44% year-to-date return and is trading near its 52-week high of $178.74. Investors and market watchers will be keeping an eye on IAMGOLD’s new mine plan for further indications of Franco-Nevada’s trajectory in the gold market. For deeper insights into Franco-Nevada’s valuation and growth prospects, including 15+ additional ProTips and comprehensive financial metrics, visit InvestingPro.

In other recent news, Franco-Nevada Corporation reported strong financial results for the first quarter of 2025, exceeding analysts’ expectations. The company achieved an earnings per share (EPS) of $1.09, surpassing the forecasted $0.96, while revenue reached $368.4 million, outpacing the anticipated $311 million. This represents a 43% year-over-year increase in revenue, driven by higher gold and silver prices. Additionally, Franco-Nevada announced a strategic acquisition, agreeing to acquire a royalty package on the Côté Gold Mine in Ontario. This acquisition includes a 7.5% gross margin royalty on the mine, which is expected to enhance the company’s asset portfolio. Following this announcement, H.C. Wainwright raised the price target for Franco-Nevada’s stock to $195, maintaining a Buy rating. In corporate governance developments, Franco-Nevada confirmed the election of its board of directors at the 2025 Annual and Special Meeting of Shareholders, with nominees receiving high approval percentages.

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