Deutsche Bank Upgrades Franco Nev Corp (FNV) to Hold
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Deutsche Bank upgraded Franco Nev Corp (NYSE: FNV) from Sell to Hold with a price target of $74.00 (from $62.00).
Analyst Jorge Beristain said, "We have revised our Franco-Nevada valuation following our initiation of peer Silver Wheaton (Buy, PT $37/sh, $29.25/sh). Royalty/streaming companies are sensitive to interest rates, and we believe they will remain lower-for-longer globally, combined with Franco-Nevada's proven low cost of equity, we are now applying 4.5% (previously 5.5%) as a Weighted Average Cost of Capital (WACC). This is lower than Silver Wheaton (5%) to recognize Franco-Nevada's greater diversity of assets and commodities, and royalty/stream split. We like Franco-Nevada's business model but believe the equity is fairly priced on NAV and is trading on 27x EV/2017E EBITDA; Upgrade to Hold."
Shares of Franco Nev Corp closed at $74.88 yesterday.
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