UPDATE: Morgan Stanley Downgrades IAMGOLD as Successful Stake Sale in Niobec Should Improve FCF Availability

In a report published Tuesday, Morgan Stanley analyst Brad Humphrey downgraded the rating on IAMGOLD Corp. (NYSE: IAG) from Equal-Weight to Underweight, but reiterated the $4.75 price target.

In the report, Morgan Stanley noted, “IAG shares are trading at ~4.5x 2014 EBITDA and likely already pricing plenty of concerns. However, given the high cost of its operations (all in sustaining cost ~$1,200/oz), low returns on growth projects, and low near-term FCF, we see lower upside in our base case than other names under our coverage. As a result, we have an Underweight rating on IAG shares. Focus on niobium may lower the company's appeal to investors looking for higher percentage gold exposure. Shares should react favorably to management actions to improve 2014 FCF.”

IAMGOLD Corp. closed on Monday at $4.27.