There are a number of positive catalysts on the horizon for Endeavour Mining PLC, according to analysts at Barclays who reiterated that the stock remains its preferred precious metals equity exposure in Europe.
In a note to clients, the analysts highlighted that on May 11, it was revealed that the West Africa-focused gold miner would be included in the MSCI Standard Development Market indices, with the rebalance effective after the market close on May 31.
They estimate the inclusion is likely to create demand for 12.1 million Endeavour shares, equivalent to 4.9% of its outstanding shares and 35 days buying.
“There are likely to be additional funds benchmarked to the index that could create additional demand over and above this post rebalance,” they noted.
A second and less significant index catalyst comes from the GDXJ Junior Gold Miners ETF by VanEck, which is changing two aspects of its methodology, effective June 17, the analysts wrote.
“EDV is currently the fifth largest constituent in the GDXJ with 4% weight, according to Bloomberg, and is set to be upweighted to 5% post review,” they wrote.
“This has potential to create demand for about 2 million EDV shares, we estimate, or six days buying.”
Another catalyst to watch for is Endeavour’s resource update for the Tanda-Iguela discovery located in Côte d'Ivoire in the third quarter, according to the analysts.
“This has potential to underscore to investors the scale and quality of EDV’s organic pipeline, reduce investor perceptions of acquisition risk, diversify the business from a geographic risk standpoint and potentially deliver another high-return organic growth option,” they wrote.
Taking these factors into account, the analysts awarded the stock an ‘Overweight’ rating and a 3000p price target, representing a 48.2% upside on Endeavour’s share price as of May 23 of 2024p.
Contact the author at emily.jarvie@proactiveinvestors.com
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