On Monday, RBC Capital Markets revised its stance on Gold Road Resources Limited (GOR:AU) (OTC: ELKMF) stock, elevating the mining company's stock from Underperform to Sector Perform. Accompanying this upgrade was an increase in the price target to AUD2.30, up from the previous AUD2.10.
The upgrade comes amid expectations of positive shareholder returns and improved financial metrics. RBC Capital forecasts a potential shareholder return of up to 35%, along with enhancements of up to 50% in key earnings measures such as enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) and free cash flow (FCF) yield.
Gold Road Resources has faced operational and exploration challenges over the past two years, resulting in its valuation aligning more closely with its industry peers. However, RBC Capital anticipates that the company will experience a turnaround, particularly highlighting a strong fourth quarter and expectations for the calendar year 2025.
The analyst from RBC Capital cited the proposed takeover of Northern Star Resources Limited (ASX:NST:AU) and De Grey Mining Limited (DEG:AU) as a catalyst for Gold Road to unlock the value of its 17.3% stake in De Grey Mining. This corporate activity is seen as a key driver for the upgrade.
In summary, RBC Capital's outlook on Gold Road Resources is now more optimistic, with the firm recognizing both the current reasonable value of the company's shares and the potential for upside catalysts in the near future.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.