Wheaton Precious Metals (WPM) Corp may have just missed estimates in its first quarter of 2023, but analysts are expecting a stronger 2Q that should leave the company on track to hit its full year guidance.
According to Stifel GMP, WPM’s 1Q numbers came in slightly below expectations due to lower revenue and timing of sales.
The streaming company's adjusted earnings per share (EPS) stood at $0.23, matching analysts' forecasts but trailing the consensus estimate of $0.25.
The revenue generated from the sale of gold equivalent ounces (GEOs) amounted to approximately $214 million, slightly below the projected $219 million.
However, attributable production exceeded expectations, reaching approximately 136,000 gold equivalent ounces (GEOs) compared to the estimated 125,000 GEOs.
WPM's revenue mix demonstrated strength in gold and cobalt but underperformed in silver and palladium compared to forecasts, Stifel noted. The company's metal sales included around 63,000 ounces of gold, 3.75 million ounces of silver, 2,950 ounces of palladium, and 323,000 pounds of cobalt, equating to approximately 112,600 GEOs sold.
The production figures indicate a buildup of inventory as sales were affected by timing, Stifel noted, after the Stillwater West mine faced temporary suspension due to infrastructure damage, while Antamina and Voisey's Bay mines produced slightly below projections.
Despite these challenges, Wheaton Precious Metals is maintaining its full-year guidance of 600,000 to 660,000 GEOs. The company plans to achieve this by increasing production from Salobo and benefiting from the higher-grade Pampacancha pit at the Constancia mine. It also reaffirmed its five- and ten-year outlook and expects the acquisition of Sabina Gold & Silver by B2Gold to have a modest impact on its GEOs from the Goose mine.
Wheaton Precious Metals' financial performance in the first quarter indicates some headwinds but remains on track to meet its annual targets, with a positive outlook for the coming years, Stifel wrote.
“WPM offers investors exposure to the streaming business model primarily focused on precious metals,” analysts wrote in a note.
“The uniqueness of the business model provides good upside, including metal price leverage and exploration/mine expansion benefits (generally at no extra cost to WPM), while limiting risks inherent to mine operators (predictable costs that limit inflationary costs pressures). The company has built a portfolio of streaming assets on mostly low-cost, long life mines.”
Stifel has a Buy rating and a C$75 price target on WPM shares.
Contact Angela at angela@proactiveinvestors.com
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