Stifel Canada on Tuesday maintained its buy rating on the shares of Sandstorm Gold (SSL.TO, SAND) and its C$13.00 price target after the royalty and streaming company agreed to be acquired by Royal Gold (RGLD) for US$3.5 billion.

"RGLD and SSL have agreed on a combination with an all-share acquisition of SSL valuing Sandstrom at US$3.5B, and in our view, reflecting a compelling P/NAV takeout valuation of 1.8x (based on Stifel estimates) and 1.55x (on consensus) - effectively closing the valuation gap with intermediate royaltyco peers. This strategic move to consolidation underscores RGLD's confidence in the long-term value of key growth projects in SSL's portfolio (Hod Maden and MARA - where timing of revenues remain somewhat uncertain, pending construction decisions). Post-transaction, RGLD's portfolio should immediately see a boost in scale. In our view, SSL's valuation had been hindered by high debt-burden as SSL ranks as the most financially levered royaltyco in our coverage, with a higher cost-of-capital limiting ability to bring-in new growth into their portfolio. We believe the takeout valuation for SSL is compelling, and allows a large Pro-forma RGLD to daylight the value of SSL's portfolio," analyst Ingrid Rico noted.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

Price: 13.42, Change: -0.54, Percent Change: -3.87