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3 “Strong Buy” Gold Stocks to Hedge Volatility

3 "Strong Buy" Gold Stocks to Hedge Volatility

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It has been quite a year, so much so that ‘2020’ is likely to become a byword among those who remember it decades hence. For investors, the key point has been volatility. The year started with modest gains in stocks, until it was derailed by the mid-winter coronavirus crisis. After the deepest short-term losses in Wall Street’s history, however, stocks rebounded – and hard. The bull run lasted more than 5 months. But now we need to ask, has it ended at last?

Since the beginning of September, the S&P 500 is down 6%, and the tech-heavy NASDAQ has lost 8%. Wall Street pros believe the rising trend in volatility is going to stay for now. To this end, even the most optimistic investors will look for ways to defend their portfolios in times like these.

And this brings up another question: Is there anything quite as good as gold? Gold has a long history as the ultimate store of value, the final safe haven for investment funds. Even in these days of fiat currency – perhaps especially in these days of fiat currency – gold retains its lustre as the original money, and gold coins still have that cachet.

Bearing this in mind, we used TipRanks’ database to identify three gold mining stocks that have received enough support from Wall Street analysts to earn a “Strong Buy” consensus rating.

SSR Mining, Inc. (SSRM)

We’ll start in Vancouver, Canada, where SSR Mining is a major gold and silver producer, with operations in both North and South America, as well as Turkey. The company’s proven reserves exceed 3 million ounces of gold at the Copler mine in Turkey, along with over 200,000 ounces per year in the US Marigold mine. The Canadian Seabee mine, in Saskatchewan, has another 500,000 ounces of recoverable gold.

Heading into 2020, SSR Mining started out with a strong quarter. Q1 earnings rose 3% sequentially, to 31 cents per share – but in Q2, as the coronavirus caught up, that number fell drastically, to a net loss of 2 cents per share. At the top line, revenues fell from Q1’s $164.5 million to $92.5 million.

Despite the earnings loss, SSRM has good news to report in the second quarter. The company finished Q2 with solid liquidity, reporting over $461 million in cash on hand. And, the company announced that it had completed the merger transaction with Alacer Gold, a process begun in the first quarter. The merger brings new assets in mines and management to SSR Mining.

5-star analyst Mark Mihaljevic, writing from RBC Capital, sees the merger and the long life of the company’s mines as the key points for investors to consider.

“We continue to believe that the merger-of-equals between SSR Mining & Alacer Gold has created a fundamentally stronger combined company with increased scale, strong free cash flow generation, and a robust balance sheet… With the addition of Copler, SSR’s average reserve life is estimated to increase to 10.5 years from 8.7 years, which is 17% longer than the peer group average of 9.0 years,” Mihaljevic noted.

Mihaljevic rates this stock as Outperform (i.e. Buy), and his $30 price target suggests it has room for 44% upside growth. (To watch Mihaljevic’s track record, click here)

The analyst consensus rating on SSRM is unanimous, based on 7 recent Buy reviews. Shares are selling for $20.72, and their average price target, at $29.67, matches the 43% upside potential of Mihaljevic’s stance. (See SSRM stock analysis on TipRanks)

Golden Star Resources (GSS)

Next up, Golden Star, is also Canadian owned, but its operations are in the Ghana, in West Africa. The company owns two mines in that country, and in 2Q20 produced a total of 50,600 ounces of gold, up 4.5% year-over-year.

The gold production turned earnings back positive from their corona-induced negative reading in Q1. At 9 cents per share, Q2 earnings were up 12 cents sequentially. The gains, in production and earnings, for the second quarter, come as the mines were able to get their personnel back to work with the waning of the COVID-19 crisis. In another important positive metric, GSS produced $27.1 million in cash flow for Q2, more than doubling Q1’s number.

The strong cash flow allowed GSS to reduce debt in Q2 by $4.7 million, and finish the quarter with a $3 million increase in cash on hand, to $45.1 million. Deep pockets and liquid assets, in turn, allowed GSS to keep up its active exploration budget and activities.

Covering this stock for H.C. Wainwright, 5-star analyst Heiko Ihle sees the company gaining from rising gold prices on the open market.

“We feel macroeconomic improvements related to precious metals are increasingly evident in the market… we note a variety of potential headwinds to continued strength in pricing, including less fear related to COVID-19, we nonetheless believe that longer-term economic impact from the recent pandemic has paved the way for strong pricing in the future,” Ihle opined.

To this end, Ihle rates GSS shares a Buy and sets a $6.80 price target, high enough to indicate a robust 49% one-year upside. (To watch Ihle’s track record, click here)

Wall Street agrees that GSS is a buying proposition. The stock gets a Strong Buy rating from the analyst consensus, based on 4 Buys and 1 Hold. The average price target, $5.12, suggests 12.5% upside from the share price of $4.55. (See GSS stock analysis on TipRanks)

B2Gold Corporation (BTG)

Last on today’s gold list is B2Gold, a small-cap miner, and another Canadian-based firm. B2G has operations in the Philippine Islands, Africa, and Central America. The company saw gains in 1H20, despite corona, and shares are up an impressive 66% year-to-date.

Turning to the revenues and earnings, B2G saw gains sequentially in Q1 and Q2. The Q1 numbers were $830 million on the top line, and 10 cents per share for earnings; in Q2, the company saw $441.9 in revenue and 11 cents EPS. Those solid numbers come in as the company reported Q2 sales of 257,100 ounces of gold at a price of $1,719 per ounce. This was up significantly from the year before. Second quarter cash flow grew by 154% year-over-year, to $454 million, mainly on the strength of higher prices.

The company has used its earnings and liquidity to double its dividend payment. In Q2, the company paid out 4 cents per common share, which gives a yield of 2.45%.

Brian Quast, 5-star analyst with BMO Capital, writes of B2G, “With a continued strong gold price, this strong balance sheet may set the stage for future dividend raises and/or development of some longer-term opportunities, such as Kiaka in Burkina Faso [...] Rolling our estimates forward by one quarter, driving stronger production at a higher gold price forecast, lifts our next-12-month cash flow estimates higher..."

Quast's price target, C$11.50, or US$8.64, supports his Buy rating and suggests an upside to the stock of 31%. (To watch Quast’s track record, click here)

All in all, with 8 Buys and only a single Hold set recently, BTG shares have a Strong Buy rating from the analyst consensus. The shares are selling for US$6.58, and their average price target of US$7.99 implies a 12-month upside of 21%. (See B2Gold’s stock analysis at TipRanks)

To find good ideas for gold stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post 3 "Strong Buy" Gold Stocks to Hedge Volatility appeared first on TipRanks Financial Blog.

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Four burning questions about the future of the $16.5B Novo-Catalent deal

To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.
Beyond spending billions of dollars to expand…

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To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.

Beyond spending billions of dollars to expand its own production capacity for its weight loss drugs, the Danish drugmaker said Monday it will pay $11 billion to acquire three manufacturing plants from Catalent. It’s part of a broader $16.5 billion deal with Novo Holdings, the investment arm of the pharma’s parent group, which agreed to acquire the contract manufacturer and take it private.

It’s a big deal for all parties, with potential ripple effects across the biotech ecosystem. Here’s a look at some of the most pressing questions to watch after Monday’s announcement.

Why did Novo do this?

Novo Holdings isn’t the most obvious buyer for Catalent, particularly after last year’s on-and-off M&A interest from the serial acquirer Danaher. But the deal could benefit both Novo Holdings and Novo Nordisk.

Novo Nordisk’s biggest challenge has been simply making enough of the weight loss drug Wegovy and diabetes therapy Ozempic. On last week’s earnings call, Novo Nordisk CEO Lars Fruergaard Jørgensen said the company isn’t constrained by capital in its efforts to boost manufacturing. Rather, the main challenge is the limited amount of capabilities out there, he said.

“Most pharmaceutical companies in the world would be shopping among the same manufacturers,” he said. “There’s not an unlimited amount of machinery and people to build it.”

While Novo was already one of Catalent’s major customers, the manufacturer has been hamstrung by its own balance sheet. With roughly $5 billion in debt on its books, it’s had to juggle paying down debt with sufficiently investing in its facilities. That’s been particularly challenging in keeping pace with soaring demand for GLP-1 drugs.

Novo, on the other hand, has the balance sheet to funnel as much money as needed into the plants in Italy, Belgium, and Indiana. It’s also struggled to make enough of its popular GLP-1 drugs to meet their soaring demand, with documented shortages of both Ozempic and Wegovy.

The impact won’t be immediate. The parties expect the deal to close near the end of 2024. Novo Nordisk said it expects the three new sites to “gradually increase Novo Nordisk’s filling capacity from 2026 and onwards.”

As for the rest of Catalent — nearly 50 other sites employing thousands of workers — Novo Holdings will take control. The group previously acquired Altasciences in 2021 and Ritedose in 2022, so the Catalent deal builds on a core investing interest in biopharma services, Novo Holdings CEO Kasim Kutay told Endpoints News.

Kasim Kutay

When asked about possible site closures or layoffs, Kutay said the team hasn’t thought about that.

“That’s not our track record. Our track record is to invest in quality businesses and help them grow,” he said. “There’s always stuff to do with any asset you own, but we haven’t bought this company to do some of the stuff you’re talking about.”

What does it mean for Catalent’s customers? 

Until the deal closes, Catalent will operate as a standalone business. After it closes, Novo Nordisk said it will honor its customer obligations at the three sites, a spokesperson said. But they didn’t answer a question about what happens when those contracts expire.

The wrinkle is the long-term future of the three plants that Novo Nordisk is paying for. Those sites don’t exclusively pump out Wegovy, but that could be the logical long-term aim for the Danish drugmaker.

The ideal scenario is that pricing and timelines remain the same for customers, said Nicole Paulk, CEO of the gene therapy startup Siren Biotechnology.

Nicole Paulk

“The name of the group that you’re going to send your check to is now going to be Novo Holdings instead of Catalent, but otherwise everything remains the same,” Paulk told Endpoints. “That’s the best-case scenario.”

In a worst case, Paulk said she feared the new owners could wind up closing sites or laying off Catalent groups. That could create some uncertainty for customers looking for a long-term manufacturing partner.

Are shareholders and regulators happy? 

The pandemic was a wild ride for Catalent’s stock, with shares surging from about $40 to $140 and then crashing back to earth. The $63.50 share price for the takeover is a happy ending depending on the investor.

On that point, the investing giant Elliott Investment Management is satisfied. Marc Steinberg, a partner at Elliott, called the agreement “an outstanding outcome” that “clearly maximizes value for Catalent stockholders” in a statement.

Elliott helped kick off a strategic review last August that culminated in the sale agreement. Compared to Catalent’s stock price before that review started, the deal pays a nearly 40% premium.

Alessandro Maselli

But this is hardly a victory lap for CEO Alessandro Maselli, who took over in July 2022 when Catalent’s stock price was north of $100. Novo’s takeover is a tacit acknowledgment that Maselli could never fully right the ship, as operational problems plagued the company throughout 2023 while it was limited by its debt.

Additional regulatory filings in the next few weeks could give insight into just how competitive the sale process was. William Blair analysts said they don’t expect a competing bidder “given the organic investments already being pursued at other leading CDMOs and the breadth and scale of Catalent’s operations.”

The Blair analysts also noted the companies likely “expect to spend some time educating relevant government agencies” about the deal, given the lengthy closing timeline. Given Novo Nordisk’s ascent — it’s now one of Europe’s most valuable companies — paired with the limited number of large contract manufacturers, antitrust regulators could be interested in taking a close look.

Are Catalent’s problems finally a thing of the past?

Catalent ran into a mix of financial and operational problems over the past year that played no small part in attracting the interest of an activist like Elliott.

Now with a deal in place, how quickly can Novo rectify those problems? Some of the challenges were driven by the demands of being a publicly traded company, like failing to meet investors’ revenue expectations or even filing earnings reports on time.

But Catalent also struggled with its business at times, with a range of manufacturing delays, inspection reports and occasionally writing down acquisitions that didn’t pan out. Novo’s deep pockets will go a long way to a turnaround, but only the future will tell if all these issues are fixed.

Kutay said his team is excited by the opportunity and was satisfied with the due diligence it did on the company.

“We believe we’re buying a strong company with a good management team and good prospects,” Kutay said. “If that wasn’t the case, I don’t think we’d be here.”

Amber Tong and Reynald Castañeda contributed reporting.

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Petrina Kamya, Ph.D., Head of AI Platforms at Insilico Medicine, presents at BIO CEO & Investor Conference

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb….

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Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

Credit: Insilico Medicine

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

The session will look at how the latest artificial intelligence (AI) tools – including generative AI and large language models – are currently being used to advance the discovery and design of new drugs, and which technologies are still in development. 

The BIO CEO & Investor Conference brings together over 1,000 attendees and more than 700 companies across industry and institutional investment to discuss the future investment landscape of biotechnology. Sessions focus on topics such as therapeutic advancements, market outlook, and policy priorities.

Insilico Medicine is a leading, clinical stage AI-driven drug discovery company that has raised over $400m in investments since it was founded in 2014. Dr. Kamya leads the development of the Company’s end-to-end generative AI platform, Pharma.AI from Insilico’s AI R&D Center in Montreal. Using modern machine learning techniques in the context of chemistry and biology, the platform has driven the discovery and design of 30+ new therapies, with five in clinical stages – for cancer, fibrosis, inflammatory bowel disease (IBD), and COVID-19. The Company’s lead drug, for the chronic, rare lung condition idiopathic pulmonary fibrosis, is the first AI-designed drug for an AI-discovered target to reach Phase II clinical trials with patients. Nine of the top 20 pharmaceutical companies have used Insilico’s AI platform to advance their programs, and the Company has a number of major strategic licensing deals around its AI-designed therapeutic assets, including with Sanofi, Exelixis and Menarini. 

 

About Insilico Medicine

Insilico Medicine, a global clinical stage biotechnology company powered by generative AI, is connecting biology, chemistry, and clinical trials analysis using next-generation AI systems. The company has developed AI platforms that utilize deep generative models, reinforcement learning, transformers, and other modern machine learning techniques for novel target discovery and the generation of novel molecular structures with desired properties. Insilico Medicine is developing breakthrough solutions to discover and develop innovative drugs for cancer, fibrosis, immunity, central nervous system diseases, infectious diseases, autoimmune diseases, and aging-related diseases. www.insilico.com 


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Another country is getting ready to launch a visa for digital nomads

Early reports are saying Japan will soon have a digital nomad visa for high-earning foreigners.

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Over the last decade, the explosion of remote work that came as a result of improved technology and the pandemic has allowed an increasing number of people to become digital nomads. 

When looked at more broadly as anyone not required to come into a fixed office but instead moves between different locations such as the home and the coffee shop, the latest estimate shows that there were more than 35 million such workers in the world by the end of 2023 while over half of those come from the United States.

Related: There is a new list of cities that are best for digital nomads

While remote work has also allowed many to move to cheaper places and travel around the world while still bringing in income, working outside of one's home country requires either dual citizenship or work authorization — the global shift toward remote work has pushed many countries to launch specific digital nomad visas to boost their economies and bring in new residents.

Japan is a very popular destination for U.S. tourists. 

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This popular vacation destination will soon have a nomad visa

Spain, Portugal, Indonesia, Malaysia, Costa Rica, Brazil, Latvia and Malta are some of the countries currently offering specific visas for foreigners who want to live there while bringing in income from abroad.

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With the exception of a few, Asian countries generally have stricter immigration laws and were much slower to launch these types of visas that some of the countries with weaker economies had as far back as 2015. As first reported by the Japan Times, the country's Immigration Services Agency ended up making the leap toward a visa for those who can earn more than ¥10 million ($68,300 USD) with income from another country.

The Japanese government has not yet worked out the specifics of how long the visa will be valid for or how much it will cost — public comment on the proposal is being accepted throughout next week. 

That said, early reports say the visa will be shorter than the typical digital nomad option that allows foreigners to live in a country for several years. The visa will reportedly be valid for six months or slightly longer but still no more than a year — along with the ability to work, this allows some to stay beyond the 90-day tourist period typically afforded to those from countries with visa-free agreements.

'Not be given a residence card of residence certificate'

While one will be able to reapply for the visa after the time runs out, this can only be done by exiting the country and being away for six months before coming back again — becoming a permanent resident on the pathway to citizenship is an entirely different process with much more strict requirements.

"Those living in Japan with the digital nomad visa will not be given a residence card or a residence certificate, which provide access to certain government benefits," reports the news outlet. "The visa cannot be renewed and must be reapplied for, with this only possible six months after leaving the countr

The visa will reportedly start in March and also allow holders to bring their spouses and families with them. To start using the visa, holders will also need to purchase private health insurance from their home country while taxes on any money one earns will also need to be paid through one's home country.

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