UPDATE 2-Agnico Eagle shares drop despite forecast for higher gold output
(Recasts with share drop, adds analysts' comments)
July 31 (Reuters) - Agnico Eagle Mines Ltd shares fell sharply on Thursday even though the gold miner reported quarterly results largely in line with expectations the day before and raised its production forecast for the year.
The Canadian miner lifted its 2014 gold output forecast by 13 percent to 1.35 million ounces after the market close on Wednesday, citing its recent acquisition of part of the Canadian Malartic mine in Quebec as well as a strong performance at other operations.
TD Securities analyst Greg Barnes said in a note to clients that he had expected the forecast to rise more, but he maintained a "buy" rating on the stock, praising Agnico's cash flow, production growth, balance sheet, and the fact that its mines are located in safe jurisdictions
Canaccord Genuity analyst Tony Lesiak said the share decline could reflect how much the stock has already gained this year.
"Agnico Eagle has been one of the best performers year to date," he said. At Wednesday's close it was up nearly 60 percent for the year.
Lesiak said he was encouraged by Agnico's exploration update, which showed a recent discovery near its Meadowbank mine in Nunavut, in northern Canada, gaining in size and grade.
Desjardins analyst Michael Parkin downgraded Agnico to "hold" from "buy", but maintained a C$46 share-price target, noting the stock is near a record-high price to cash flow ratio.
The company reported a second quarter profit after a year-earlier loss as gold production jumped and its costs dropped. Continued...