Inside Gold Miners’ Price Targets: Gauging Upside Potential
Factors impacting analyst sentiment
In 1Q17, gold prices (GLD) have risen 8.5%. While gold prices have repercussions on gold miners’ performances based on their leverages, most of the price movements in 1Q17 have been driven by company-specific factors like full-year 2016 results, reserves, and guidance for 2017.
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Newmont Mining and Goldcorp
Among the senior gold miners, analysts are most bullish on Newmont Mining (NEM) with 55.0% “buy” and 40.0% “hold” ratings. One year earlier, 45.0% of analysts were recommending a “buy” for the stock. Along with higher gold prices, a reduction in Newmont’s debt in 2016 encouraged investors to turn positive on the stock. Its target price has also seen an upward revision of 43%.
Goldcorp (GG) comes in second with 50.0% of the 26 analysts recommending a “buy.” The bullishness among analysts has steeply corrected over the last year. One year back, 73.0% of analysts rated Goldcorp a “buy.”
The company’s strong production and cost outlook has encouraged analysts to upgrade the stock. Its target price implies an upside of 25%.
Upward revision in target prices
According to consensus analyst estimates compiled by Thomson Reuters, Barrick Gold (ABX) has 48.0% “buy” ratings, 48.0% “hold” ratings, and 4.0% “sell” ratings. Its target price implies an upside of 11% based on its current price of $19. Its target price has seen an upward revision of 53% in the last one year.
Analysts’ opinions are tilted toward a “hold” for Kinross Gold (KGC) with 63.0% of them rating it a “hold.” Its target price is $4.40, which represents a rise of 25.0% in the last year.
For an in-depth review of senior miners’ ratings, read Trump Uncertainty: Which Gold Stocks Are Analysts Betting On? In the next part, we’ll take a close look at the reasons for analysts’ recent revisions in 1Q17.