Credit Suisse Downgrades Eldorado Gold, Will Wait For Dust To Settle

Credit Suisse has downgraded Eldorado Gold Corp (USA) EGO to Neutral from Outperform citing geopolitical headwinds in Turkey.

"In the near term geopolitical headwinds will likely dampen a re-rating from potential upcoming positive catalysts," analyst Anita Soni wrote in a note.

"Turkey was seen as a relatively stable operating base" for Eldorado, and on the back of the Chinese assets sale, it comprises the majority of the production outside Greece and 52 percent of Credit Suisse's net asset value of $3.526 billion, or $4.93 a share.

The attempted military coup on July led to a State of Emergency for Turkey, expected to last roughly three months' time.

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"In our view recent events in Turkey have led to a perception of higher political risk which will likely introduce share performance headwinds and make outperformance unlikely until greater visibility is achieved," Soni noted.

Soni, who also cut her price target to $5.25 from $7, said the upcoming catalysts include the second-quarter results on July 28 (Credit Suisse expects EPS of $0.01 in line with Street) and the September 7 investor day in Toronto.

On the valuation front, the analyst noted that Eldoroado is trading at 0.88x P/NAV, a 0.31x discount to peers at 1.19x, in line with its average 0.30x discount over the last 12 months.

Shares of Eldorado Gold closed Thursday's regular trading session up by 2.78 percent at $4.44. In Friday's pre-market session, the stock was sen down 2.25 percent to $4.34.

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