Durable Goods (Jun F) -9.4% vs 9.3% Prior, Ex-Trans 0.2% vs 0.2%
On Tuesday, BMO Capital Markets began coverage on Royal Gold (NASDAQ:RGLD), a prominent gold streaming and royalty company, with a Market Perform rating and a price target set at $196. The firm’s analyst Matthew Murphy highlighted Royal Gold’s potential for robust free cash flow in the near term, fueled by the progress of key assets. The company’s strong financial position is evident in its impressive gross profit margins of 86.3% and healthy cash flows that easily cover interest payments, according to InvestingPro data.
Royal Gold is expected to benefit from the development of its Pueblo Viejo, Goldrush, and Khoemacau projects. These assets are anticipated to contribute significantly to the company’s performance. Additionally, Royal Gold’s financing obligations are reportedly lower compared to its industry peers, which could position the company favorably in terms of financial flexibility. InvestingPro analysis shows the company operates with moderate debt levels and maintains strong liquidity, with current assets exceeding short-term obligations by more than 3 times.
Murphy noted that Royal Gold has made strides in enhancing the duration of its asset base over recent years. This improvement suggests a more sustainable and long-term approach to the company’s asset management and investment strategies. The company’s commitment to shareholder returns is demonstrated by its 26-year track record of maintaining dividend payments, with nine consecutive years of dividend increases.
Despite the positive aspects of Royal Gold’s business, BMO Capital pointed out a potential concern. The firm indicated that among the companies in its coverage, Royal Gold exhibits the lowest forward-looking growth. This aspect of the company’s outlook may have influenced the Market Perform rating, as it suggests a more cautious view of the company’s growth trajectory compared to its peers.
The price target of $196 assigned by BMO Capital Markets reflects the firm’s valuation of Royal Gold based on the current market conditions and the company’s financial prospects. This target is intended to give investors insight into the firm’s expectations of the stock’s performance in the market.
In other recent news, Royal Gold Inc. has released its 2025 guidance for sales volumes, projecting gold sales between 210,000 to 230,000 ounces, silver sales from 2.7 to 3.3 million ounces, and copper sales reaching 13.5 to 16.0 million pounds. The company also announced a quarterly dividend of $0.45 per share, payable on April 17, 2025, to shareholders of record as of April 4, 2025. Additionally, Royal Gold has revised executive compensation agreements, detailing updated salaries and severance terms for top executives, including President and CEO William Heissenbuttel. The company disclosed that board member Kevin McArthur will step down effective May 22, 2025, as he assumes a new role at First Quantum Minerals Ltd (TSX:FM). Raymond (NSE:RYMD) James has raised Royal Gold’s price target to $188 while maintaining an Outperform rating, citing the company’s strong business model and diversified asset portfolio. The firm’s approach to royalty and streaming agreements is seen as providing stable revenue with limited exposure to operating costs. Royal Gold emphasizes its global presence with interests in 175 properties, including 42 producing mines. The company’s financial outlook includes expected DD&A expenses of $126 to $142 million and an effective tax rate of 17 to 22 percent for 2025.
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