Factors Impacting Analysts’ Estimates for Gold Miners
Wall Street analysts’ forecasts for gold mining companies’ (GDX) (JNUG) revenues can give us a good idea about their views on gold prices (GLD) going forward. In this part of the series, we’ll assess analysts’ revenue expectations for gold companies in 2Q17 and beyond.
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Analysts’ revenue expectations
Wall Street analysts expect revenues of $2.1 billion for Barrick Gold (ABX) in 2Q17, 6.5% higher than what it earned in 2Q16. Analysts forecast a decline of 2.5% in ABX’s revenues YoY (year-over-year) in fiscal 2017.
Barrick Gold is guiding for 3% growth in production in 2017 at the midpoint of its guidance. This implies that analysts are either factoring in production growth that’s lower than the midpoint or lower gold prices.
Analysts’ revenue estimate for Newmont Mining (NEM) is $1.7 billion for 2Q17, implying a sequential increase of 6.9%. Its revenue estimate for 2017 is $7.0 billion, which shows a rise of 5.0% YoY. The rise is mainly expected due to accelerated production, as a full year of production from its new projects, including Merian and Long Canyon, should be factored in.
Goldcorp’s (GG) revenue estimates for 2Q17 imply a sequential fall of 4.0% to $847 million. The estimate, however, implies a gain of 12.5% YoY. Its revenue estimate for 2017 also represents a decline of 4% compared to 2016. This YoY fall is mainly attributable to the decline in its production, which is already guided by the company.
Kinross Gold’s (KGC) revenue estimates imply a sequential fall of 1.2% in 2Q17. Even for 2017, analysts expect to see a 5.7% fall in revenues compared to 2016, which could be due to the company’s anticipated fall in production. This expectation has resulted from the suspension of mining activities at Maricunga and anticipated lower grades at its Russian operations.