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Here’s Why Yamana Gold Inc.’s Stock Is Falling Today

By Matthew DiLallo - Jan 14, 2016 at 4:22PM

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A trifecta of bad news weighed on the gold miner today.


What: Yamana Gold (AUY 1.19%) shares slumped just more than 10% by 3:30 p.m. EST on Thursday. There was a lot weighing on the stock today, including a weaker gold price, an analyst downgrade, and the release of its preliminary results and future outlook.

So what: We'll start with the price of gold, which was down nearly $10 per ounce, or about 1%. That drop also weighed on a number of Yamana's peers, with Goldcorp (GG) and Kinross Gold (KGC 2.27%) also slumping. Goldcorp only fell 6%, while Kinross Gold was down just 5%.

One of the big reasons why Yamana Gold endured a steeper decline was due to its stock being downgraded by Barclays. The bank lowered its rating to equal weight from overweight, while also reducing its price target from $3.50 to $2.50. In doing so, it cited weakening fundamentals, which will likely put a lid on metal prices in 2016. Yamana wasn't the only gold miner to be downgraded this week; it joined Goldcorp, which was downgraded by Credit Suisse yesterday. The analyst firm cited concerns about Goldcorp's production outlook.

Speaking of production outlooks, Yamana Gold offered its outlook for 2016-2018 along with its preliminary results for 2015. Those preliminary results were a bit weaker than the company's guidance, with production toward the lower-end of its guidance, while costs were above what it expected. Meanwhile, its future outlook was a bit light, with cash costs expected to be above 2015's level.

Now what: Gold miners live and die with the price of gold. When gold falls, it will take these stocks with it. Add on some additional weight -- like downgrades and missed expectations -- and it can really make for a tough day.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Yamana Gold Inc. Stock Quote
Yamana Gold Inc.
$5.10 (1.19%) $0.06
Goldcorp Inc. Stock Quote
Goldcorp Inc.
Kinross Gold Corporation Stock Quote
Kinross Gold Corporation
$3.60 (2.27%) $0.08

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