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How Analysts Rate Gold Miners amid Gold Price Volatility

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Part 7
How Analysts Rate Gold Miners amid Gold Price Volatility PART 7 OF 10

Kinross Gold: Behind Recent Analyst Rating Changes

Analysts’ recommendations

Currently, Kinross Gold (KGC) doesn’t have any “sell’ ratings. According to data compiled by Thomson Reuters, of the 18 analysts covering Kinross Gold, 56% have “hold” recommendations while 44% have “buy” ratings on the stock. Its target price is $4.57, which implies an upside of 9.0%.

Kinross Gold: Behind Recent Analyst Rating Changes

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Peers (GDX) (JNUG) Newmont Mining (NEM), IamGold (IAG), Agnico Eagle Mines (AEM), and Coeur Mining (CDE) also have a wide range of target prices.

Year-to-date, Kinross’s stock price has outperformed its closest peers. This outperformance is on the back of its solid operating performance in 2017.

Recent rating changes

Citigroup (C) upgraded Kinross Gold from “sell” to “hold” on September 1, 2017, and lifted its target price from $3.25 to $4.75. Citi’s view is that amid the geopolitical tensions, gold prices can remain supported in the range of $1,260–$1,360 per ounce, with an upward bias for the remainder of 3Q17. 

Its analysts also believe that weak inflation growth could require the Fed to slow down the pace of its rate hikes. This would again be a positive for gold prices as well as gold miners. To reflect this change, Citi upgraded Kinross to “neutral.” It still, however, prefers the “buy”-rated Barrick Gold (ABX).

BMO Capital Markets upgraded Kinross from “market perform” to “buy” on May 29, 2017. It also increased its target price from $3.75 to $5.00. The firm’s analyst believes that KGC’s steady stage of execution and its current relative valuation are both attractive.

Other rating and target price changes

On August 4, 2017, Scotiabank increased Kinross’s target price from $4.5 to $4.75. The firm has a “sector perform” rating on the stock.

TD Securities also boosted Kinross’s target price from $5.50 to $6.00 on August 3, 2017. The firm has an “action list buy” on the stock. TD had upgraded Kinross from “buy” to “action list buy” in May 2017. TD Securities had referred to Kinross as an “underappreciated senior gold producer.”

Below are some of the catalysts that TD securities mentioned as the reasons for the upgrade:

  • feasibility and development decision on the Tasiast mine
  • mine life extension project at Round Mountain
  • details of the Fort Knox mine expansion in Alaska
  • expected doubling of production at Bald Mountain
  • planned start of Phase I of Tasiast in 1H18
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