On Monday, UBS has initiated coverage on shares of Wheaton Precious Metals Corp (NYSE:WPM) with a Buy rating and a price target of $78.00. The firm highlighted the company's expected growth in Gold Equivalent Ounce (GEO) output by approximately 30% by the year 2028, which is anticipated to reach around 600,000 ounces.
The growth projection is attributed to Wheaton Precious Metals' diverse project portfolio, which includes contributions from developments such as Santo Domingo, Platreef, Blackwater, and Kone, as well as core streams at Salobo and Pensaquito. This diversification is believed to reduce the company's risk profile compared to Franco-Nevada and smaller gold miners with more concentrated growth.
UBS forecasts a roughly 30% upside to the stock based on a 20 times 2026 estimated enterprise value to EBITDA (EV/EBITDA) ratio. The firm's valuation reflects confidence in Wheaton Precious Metals' strategy and its ability to execute on the projected growth.
The company's stock performance has been moderate over the past two to three years, but the coverage initiation by UBS suggests a positive outlook for the future. The price target of $78.00 per share represents UBS's expectation for the stock's potential trajectory over the coming years.
In other recent news, Wheaton Precious Metals Corp. reported a robust third quarter in 2024, with record operating cash flows of $254 million. The company's revenue increased by 38% to $308 million, and net earnings were reported at $155 million. Wheaton Precious Metals Corp. remains on track to meet its 2024 guidance of 550,000 to 620,000 gold equivalent ounces.
Two strategic streaming agreements, a $100 million expansion for the Rio2 Phoenix project and a new $625 million gold stream on the Kona project, were announced. The company also declared a quarterly dividend of $0.155 per share, a 3% increase from the previous year.
In terms of financial health, Wheaton Precious Metals Corp. has a strong balance sheet with $694 million in cash and a $2 billion undrawn credit facility. The company anticipates a production increase of approximately 40% by 2028, driven by existing and upcoming projects. These are among the recent developments that underline the company's growth potential.
InvestingPro Insights
Wheaton Precious Metals Corp's (NYSE:WPM) financial metrics and market performance align with UBS's bullish outlook. According to InvestingPro data, the company's revenue growth of 29.72% over the last twelve months supports the growth narrative highlighted by UBS. Additionally, WPM's strong gross profit margin of 80.4% underscores its operational efficiency, which could be crucial in capitalizing on the projected 30% increase in GEO output by 2028.
InvestingPro Tips reveal that WPM has maintained dividend payments for 14 consecutive years, indicating financial stability and a commitment to shareholder returns. This consistency aligns with the company's diverse project portfolio mentioned in the UBS report, potentially providing a steady income stream for investors alongside capital appreciation.
Another relevant InvestingPro Tip notes that 6 analysts have revised their earnings upwards for the upcoming period, which corroborates UBS's positive stance on the stock. This consensus among analysts suggests growing confidence in WPM's future performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Wheaton Precious Metals, providing a deeper understanding of the company's financial health and market position.
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