Gold stocks – Osisko Gold (NYSE:OR) and Wheaton Precious (NYSE:WPM) are scheduled to announce their second-quarter results next week. Analysts expect the Q2 earnings of Osisko Gold and Wheaton Precious to improve and drive the stocks higher. However, the fall in gold prices over recent days and an unimpressive outlook could impact investor sentiment.
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Gold prices have trended lower in recent days, with the rise in the U.S. dollar making gold more expensive for holders of other currencies. Moreover, the Federal Reserve recently raised interest rates by 25 basis points. Higher interest rates increase the opportunity cost of holding a non-yielding asset like gold. Overall, gold prices are expected to be range-bound in the coming days.
It is worth noting that gold had a good run in the first half of the year due to central bank purchasing and its status as a safe-haven investment as well as a hedge against inflation. Gold prices increased by 5.4% in U.S. dollars in the first half of the year and fared better than all other major asset classes except for developed market stocks, per the World Gold Council.
Osisko Gold Royalties (NYSE:OR)
Osisko is an intermediate precious metal royalty company that holds a North American-focused portfolio of more than 180 royalties, streams, and precious metal offtakes. The company’s cornerstone asset is a 5% net smelter return royalty on the Canadian Malartic mine, which is the largest gold mine in Canada.
The company is scheduled to announce its second-quarter results on August 9. Last month, it provided a preliminary Q2 update, as per which it earned about 24,645 attributable gold equivalent ounces (GEOs). The Q2 GEOs reflected an 11% year-over-year growth and included 1,527 GEOs earned from the recently acquired CSA silver stream, for which revenues are expected to be recognized in Q3 2023.
Further, preliminary revenues from royalties and streams increased 17% to C$60.5 million. The preliminary cost of sales (excluding depletion) grew 16% year-over-year to C$4.3 million in Q2 2023. The cash margin grew 18% to C$56.2 million, representing a 93% margin on revenues from royalties and streams.
Based on the above update, analysts expect the company to report adjusted EPS of C$0.14 (or $0.11) compared to an adjusted loss per share of C$0.03 per share in the prior-year quarter.
Is Osisko a Good Buy?
Wall Street has a Strong Buy consensus rating on Osisko Gold based on three Buys and one Hold. The average price target of $19.84 implies 41% upside potential. Shares have risen 16.5% year-to-date.
Wheaton Precious Metals (NYSE:WPM)
Wheaton is one of the largest precious metals streaming companies in the world. Under its streaming business model, the company has agreements to purchase all or a part of the precious metals or cobalt production from high-quality mines for an upfront payment and an additional payment upon delivery of the metal.
Wheaton has streaming agreements for 21 operating mines and 13 development-stage projects. In May, the company signed a $300 million streaming deal with Lumina Gold (TSE:LUM) to purchase gold from its Cangrejos gold-copper project in Ecuador. Under this agreement, Wheaton will buy 6.6% of the payable gold until 700,000 ounces of gold has been delivered, after which the stream will be reduced to 4.4% of the payable gold production for the life of the mine.
Meanwhile, Wheaton is scheduled to report its second-quarter results on August 10. Analysts expect the company’s adjusted EPS to grow to $0.27 from $0.25 in the prior-year quarter.
While revenue and EPS declined in Q1 2023, the company said that it continues to see positive developments at a number of its key assets, including Salobo and Constancia. It expects significant production growth throughout 2023, resulting in a strong performance in the second half of the year.
Is WPM a Good Stock to Buy?
With five Buys and three Holds, Wheaton Precious Metals earns a Moderate Buy consensus rating. The average price target of $54.78 implies 29.2% upside potential. Shares have advanced 8.5% so far in 2023.
