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Target Price Lowered on Goldcorp to Reflect Updated Model
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A CIBC report itemized the revisions and noted their cumulative impact.

In a March 11 research note, analyst Anita Soni reported that CIBC lowered its price target on Goldcorp Inc. (G:TSX; GG:NYSE) to US$12 per share from US$12.50 (current share price is about US$10.93) after adjusting its model on the major "to reflect 2019 guidance, year-end results and technical reports."

Soni noted CIBC made three changes to its standalone model of Goldcorp and described what they were.

In one, the analyst relayed, CIBC lowered its projected 2019 total production to 2.279 million ounces (2.279 Moz) from 2.324 Moz due to Goldcorp intending to lower output at Cerro Negro, Musselwhite and Porcupine. CIBC's adjusted figure still falls within the miner's guidance of 2.2–2.4 Moz of production in 2019.

A second model revision involved increasing costs and all-in sustaining cost (AISC) to $503 per ounce ($503/oz) and $886/oz, respectively, up from $490/oz and $858/oz. Spurring this change, Soni indicated, were actual Q4/18 figures, 2019 guidance and recently obtained technical reports on Éléonore and Red Lake. CIBC's new estimates are higher than Goldcorp's projected ranges of $400–500/oz for actual costs and $750–850/oz for AISC.

Third, CIBC raised its 2019 capex estimate on Goldcorp, to $936 million from $803 million to reflect increases at Cerro Negro and Peñasquito, Soni explained. Unlike the previous, the new dollar amount falls within Goldcorp's guidance of $865–975 million.

The result of CIBC's new financial model on the gold miner lowered the net present value 5% (NPV5) by about 4%. As such, the bank trimmed its target price on Goldcorp. It does, however, maintain its Neutral rating.

CIBC expects Goldcorp shares to be range-bound "awaiting the final outcome of the proposed acquisition by Newmont."

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Disclosures from CIBC, Goldcorp Inc., March 11, 2019

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analysts employed outside the U.S. are not registered as research analysts with FINRA. These analysts may not be associated persons of CIBC World Markets Corp. and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Goldcorp Inc. (GG)

CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Goldcorp Inc. in the next 3 months.

CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own1% or more of a class of equity securities issued by Goldcorp Inc.

Disclosure for Newmont Mining Corp. (NEM): CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months.





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