Metal Stocks Hitting an Inflection; Targets Raised - Deutsche Bank

October 2, 2012 3:17 PM EDT
Get Alerts PAAS Hot Sheet
Price: $18.36 +5.15%

Rating Summary:
    4 Buy, 10 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 35 | Down: 31 | New: 9
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In addition to upgraded Pan American Silver Corp. (NASDAQ: PAAS) and downgrading Goldcorp Inc. (NASDAQ: GG), the Metals and Mining team at Deutsche Bank adjusted their prices targets on a host of names.

Barrick Gold (NYSE: ABX) $50 to $59 (Buy)
Coeur d'Alene Mines (NYSE: CDE) $30 to $37 (Buy)
Cliffs (NYSE: CLF) $60 to $45 (Buy)
Freeport-McMoRan (NYSE: FCX) $45 to $50 (Buy)
Kinross Gold (NYSE: KGC) $13 to $16 (Buy)
Vale (NASDAQ: VALE) $26 to $24 (Buy)
Alcoa (NYSE: AA) $9 to $8 (Hold)
Hecla Mining (NYSE: HL) $5 to $6 (Hold)
Newmont Mining (NYSE: NEM) $50 to $59 (Hold)
Silver Standard (NASDAQ: SSRI) $14 to $15 (Hold)
Southern Copper (NASDAQ: SCCO) $36 to $42 (Hold)
Teck Resources (NYSE: TCK) $37 to $31 (Hold)

"Given the increasingly volatile macro and commodity outlook, combined with sharp equity underperformance vis-à-vis underlying commodities, we believe the sector is hitting an inflection point where routine operating cost and capital spending over-runs are no longer being tolerated by boards or investors," the firm comments. "Investors have harshly punished mining equities for two successive years (2011, 2012) and heads are starting to roll. We now rate those companies Buy that have the most ability to rein in capital spending (postpone, downsize capex projects) and have shown the most willingness to return cash to shareholders. To put it bluntly, managing for aggressive growth is passé."

Tops picks in the sector are: Coeur d'Alene Mines, Cliffs, Freeport-McMoRan, Kinross Gold, Thompson Creek (NYSE: TC).

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