On Wednesday, TD (TSX:TD) Securities adjusted its stance on Wheaton Precious Metals (NYSE:WPM), downgrading the stock from Buy to Hold and reducing the price target to $51 from the previous $58. The firm's revised outlook aligns with Wheaton Precious Metals' forecast for its 2024 Gold Equivalent Ounce (GEO) production, which is set between 550,000 and 620,000 ounces. This projection falls significantly short of TD Securities' initial estimate of 660,000 GEOs.
The anticipated decline in year-over-year production at the Salobo mine is due to lower ore grades, despite an increase in throughput following a recent expansion. While production at the Penasquito mine is expected to rise compared to the previous year, which was affected by a strike, the recovery might not meet initial expectations. Additionally, the GEO deliveries from the Constancia mine are projected to decrease slightly in 2024, contrary to the analyst's earlier forecast of an increase.
In response to the company's guidance, TD Securities has revised its 2024 GEO production estimate down to 590,000 ounces and taken a more conservative view for 2025, reducing the GEO production estimate to 642,000 ounces from approximately 717,000 ounces. This adjustment reflects lowered expectations for GEOs from the Salobo and Voisey's Bay mines, among other minor changes.
Despite the near-term reductions, Wheaton Precious Metals' management anticipates a significant increase in production in the long term. The company projects over 800,000 ounces of GEO production by 2028 and an average of over 850,000 GEOs from 2029 to 2033. This outlook surpasses previous estimates, which did not account for the lower production in 2023 and 2024. However, TD Securities remains cautious, forecasting approximately 750,000 GEOs in 2028, assuming that the Copper World project will not commence production until 2029 and excluding production from Santo Domingo until the 2030s, both of which are included in Wheaton Precious Metals' forecast.
InvestingPro Insights
As Wheaton Precious Metals (NYSE:WPM) navigates through its production forecasts and operational challenges, investors are closely monitoring the company's financial health and market performance. According to InvestingPro data, Wheaton Precious Metals currently has a market capitalization of $18.93 billion, indicating its significant presence in the industry. Despite the adjustments in production estimates, the company's P/E ratio stands at a high 37.42, suggesting a premium valuation by the market as of the last twelve months ending Q3 2023.
One of the notable InvestingPro Tips for Wheaton Precious Metals is that the stock generally trades with low price volatility, which may appeal to investors seeking stability in their portfolio. Furthermore, the company's ability to maintain dividend payments for 13 consecutive years emphasizes its commitment to returning value to shareholders, even in the face of operational adjustments.
InvestingPro data also highlights that the company's shares are trading near their 52-week low, with a price of $44.22 at the previous close. This could represent a potential entry point for investors considering the long-term production growth anticipated by the company's management. Additionally, with a dividend yield of 1.36%, Wheaton Precious Metals continues to offer an income stream to its investors.
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