In a March 20 research note, BMO Capital Markets analyst Andrew Kaip reported that Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) beat earnings per share (EPS) estimates in Q4/18 and, looking forward, the Rosemont project offers upside to production guidance.
Kaip highlighted that Wheaton's adjusted Q4/18 EPS was $0.08, which exceeded BMO and consensus' forecasts of $0.05, due to lower costs, depletion and an adjustment related to professional fees dictated by the Canada Revenue Agency settlement.
Also a beat, Kaip added, was the company's operating cash flow during the quarter, coming in at $108.5 million versus BMO's projection of $96 million.
The analyst reported that in Q4/18, Wheaton produced 107,600 ounces (107.6 Koz) of gold, 5.5 million ounces (5.5 Moz) of silver and 5.9 Koz of palladium. It sold 102.8 Koz of gold, 4.4 Moz of silver and 5 Koz of palladium.
As for the company's production projections for 2019, Kaip relayed that management guided to a total 690 Koz of gold equivalent (Au eq), or, specifically, 365 Koz of gold, 24.5 Moz of silver and 22 Koz of palladium. Production guidance through 2023 is an estimated average of 750 Koz Au eq.
Wheaton's guidance excluded any production from the Rosemont project, which will likely "move toward development" now that the water permit has been received, Kaip noted. As such, Rosemont represents upside.
During Q4/18, Wheaton repaid $116.5 million on its credit facility, whose term was extended to 2024, Kaip indicated. At year-end 2018, the company had $76 million in cash and $1.3 billion outstanding on its $2 billion revolving credit facility.
ROTH has an Outperform rating and a US$27 per share target price on Wheaton Precious Metals. Its stock is currently trading at around US$24.83 per share.
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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Wheaton Precious Metals. Click here for important disclosures about sponsor fees.
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Disclosures from BMO Capital Markets, Wheaton Precious Metals Corp., March 20, 2019
IMPORTANT DISCLOSURES
Analyst's Certification
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Wheaton Precious Metals within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Wheaton Precious Metals
within the past 12 months.
Disclosure 6A: Wheaton Precious Metals is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets
Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 8A: BMO Capital Markets or an affiliate has a financial interest in 1% or more of any class of the equity securities of Wheaton Precious Metals.
Disclosure 9B: BMO Capital Markets makes a market in Wheaton Precious Metals in United States.
Disclosure 16: A research analyst has extensively viewed the material operations of Wheaton Precious Metals.
Disclosure 17: Wheaton Precious Metals has paid or reimbursed some or all of the research analyst's travel expenses.
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