Royal Gold's Growth Remains 'Modest,' Says Bullish Analyst: 'This Could Change'

Royal Gold Inc RGLD announced its second-quarter dividend.

Following the slight underperformance of the stock, its valuation appears “more compelling,” given the latest commodity price assumptions, according to BMO Capital Markets.

The Royal Gold Analyst: BMO Capital's Jackie Przybylowski upgraded the rating for the Denver-based company from Market Perform to Outperform, while raising the price target from $148 to $158.

The Royal Gold Thesis: The sector is poised to benefit from “a positive environment for meaningful new stream and royalty deals through this year,” Przybylowski said in the upgrade note.

Royal Gold has adopted creative solutions to protect asset value, both for itself and the mine operator, the analyst stated. This is demonstrated by the company’s efforts to continuously improve asset quality “through the addition of long-lived assets (including the Barrick/Newmont Cortez royalty)” and the new Mt Milligan agreement announced in February 2024, he added.

“The royalty and streaming model could be appealing as the largest and most well-funded companies could see opportunities for material new growth in 2024,” Przybylowski wrote.

Although growth has remained modest, “this could change through the year,” with opportunities for more and larger transactions, “including M&A (likely including divestments of Newmont assets), organic growth fueled by high commodity prices, and balance sheet repair,” he added.

RGLD Price Action: Shares of Royal Gold had risen by 6.24% to $116.93 at the time of publication on Wednesday.

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