BofA Maintains Hold Rating on Franco-Nevada (FNV) Stock

On May 28, analyst Lawson Winder from Bank of America Securities reiterated a Hold rating on Franco-Nevada Corporation (NYSE:FNV) with a price target of C$266. The reiteration comes after the company acquired a stake in Cote Gold Mine in Canada.

Franco-Nevada Corporation (NYSE:FNV) is a Canadian company focused on gold royalties and streaming. Rather than operating mines or conducting exploration, the company provides financing to mining companies in exchange for royalties or streams.

The company recently acquired a 7.5% gross margin royalty on the Cote Gold mine in Canada for $1.05 billion. Analyst Winder noted that this opportunity offers a royalty on a long mine life, with a modest immediate internal rate of return, considering the current gold prices. However, this step has led Franco-Nevada Corporation’s (NYSE:FNV) net asset value to decline by 2% to C$266 per share.

Regardless of the company’s diversified portfolio and its long-term exposure to precious metals, it is trading at a premium to its peers in the industry. Winder believes that the company’s long-term growth prospects do not justify the premium price despite the potential of its newly acquired stake in Cote Gold Mine, therefore, he reiterated a Hold rating.

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