In a macroeconomic environment like this, it would be safe to think that metal and mining stocks would do well. For Agnico Eagle (NYSE:AEM), it’s not quite that simple. In fact, this is one eagle in a serious downdraft, and it’s all thanks to one big problem: costs.
Agnico Eagle turned in an excellent year. It put up a record for full-year gold production, which is no mean feat. However, it also offered up some much less pleasant guidance, which featured higher costs and lower production. One or the other of those wouldn’t likely have been such a problem. However, putting both together in guidance likely raised some investors’ hackles.
With higher costs expected on several fronts—labor for one, but also for electricity and fuel as well as other consumables—it’s going to be a drain on the company’s good fortune so far. However, given the sheer amount of macroeconomic uncertainty out there, gold prices may be due for a lift in the days ahead.
Wall Street, meanwhile, has little concern about the company’s future. All six analysts covering AEM stock call it a Buy with an average price target of $62.66, implying 35.92% upside potential.
