Royal Gold, Inc. (TSX:RGL) has been awarded a ‘Buy’ rating and $325 price target in initial coverage from UBS analysts, who cited a combination of improving production growth visibility, a more diversified asset base, and potential for a valuation re-rating.
Shares of Royal Gold traded hands at $272 on Wednesday afternoon.
The analysts wrote that Royal Gold offers relatively lower-risk exposure to gold price upside compared with traditional miners, alongside a near- to medium-term production growth profile that it views as underappreciated by the market.
They highlighted that after a three- to four-year period of declining gold equivalent ounce (GEO) production, the company is entering a renewed growth phase supported by both acquisitions and organic development.
A key focus of the outlook is the impact of recently completed and expected transactions, including the Sandstorm and Horizon assets and the Kansanshi stream in 2025. UBS estimated that these additions could support more than 30% growth in 2026, with further guidance pointing to approximately 20% organic growth between 2026 and 2030.
Over the longer term, the firm also pointed to incremental contributions from development-stage projects that could add roughly 50,000 GEOs, or around 15% relative to 2026 estimates.
UBS forecast Royal Gold reaching approximately 475,000 GEOs by 2030, broadly in line with company guidance of 430,000 to 480,000 GEOs, but notes that upside could emerge from higher gold prices, life extensions at existing operations, and accelerated project development.
The pipeline includes exposure to projects such as Fourmile in the United States, MARA in Argentina, Cactus in the United States, Oyu Tolgoi in Mongolia, Platreef Phase III in South Africa, and Gualcamayo in Argentina.
Further, the firm highlighted structural advantages of streaming and royalty companies over miners, noting their fixed-cost, margin-light model, lower exposure to capital expenditure inflation, and more diversified asset portfolios. UBS argued these characteristics can reduce earnings volatility while providing leveraged exposure to commodity prices.
From a valuation perspective, UBS noted that Royal Gold trades at around 12x 2027 EBITDA based on spot gold assumptions, below its five-year average multiple of approximately 14.5x.
The bank’s analysts see scope for the stock to re-rate as investors gain greater visibility following the completion of recent transactions and the introduction of medium-term guidance.
It also highlighted that peers such as Wheaton Precious Metals and Franco-Nevada trade at higher valuation multiples closer to 20x EBITDA.
UBS concluded that improved production visibility, a more diversified asset base, and potential for sustained growth could support both earnings expansion and multiple re-rating over the medium term, particularly if Royal Gold continues to deliver on its development pipeline and integration of recent acquisitions.