What’s Wall Street Saying about Senior Gold Miners?



Market sentiment

Analysts’ recommendations and ratings are some of the most important market sentiment indicators investors can look at. Ratings reflect how bullish or bearish analysts are on a particular company or industry.

At the extreme, market sentiment could be an indicator of a change in direction going forward. Generally, when everyone is bearish and dumping stocks, it could mean a bottom and better times ahead, and vice versa.

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Paring back expectations

Among the senior gold miners (GDX), analysts are most bullish about Agnico Eagle Mines (AEM). They’ve given AEM 54% “buy” ratings and 38% “hold” ratings.

While Agnico remains the stock with the most “buy” ratings in the intermediate space, its popularity among analysts has fallen drastically since the start of 2016. It had 80% “buy” ratings and only 8% “sell” ratings at the start of the year.

Goldcorp (GG) comes second to Agnico, with 46% of 24 analysts recommending “buys.” Even for Goldcorp, analysts’ bullishness has steeply corrected over the last quarter. At the beginning of 2016, 83% of analysts rated Goldcorp as a “buy.”

In response to Goldcorp’s disappointing production guidance for the next three years, analysts have pared back their estimates and ratings. To learn more about Goldcorp’s guidance, please see How Long Will the Market Punish Goldcorp for 4Q15 Results?

57% of analysts recommend “holds” for Yamana Gold (AUY). Its target price of $3.70 implies a downside potential of 12%. After a very strong run for the stock, analysts have pared back their expectations.

Upward revision in target prices

Barrick Gold (ABX) has a consensus “hold” rating, with 52% “hold” ratings and 41% “buy” ratings. This stock, however, has seen the largest upward revision of its target price among its peers. Since the beginning of 2016, its target price has risen 63% to $15.

Newmont Mining (NEM) has 36% “buy” ratings and 59% “hold” ratings. While its ratings have remained more or less constant since the start of 2016, its target price was revised 26% upward to $29.2.

Analysts’ opinions are divided equally about Kinross among “buy” and “hold” ratings. 39% of analysts recommend each option. However, many of the “hold” ratings have have turned into “buys” since the start of 2016. 58% of analysts said “hold,” and only 25% said “buy” for Kinross earlier this year. Its target price is $3.80, a rise of 57% year-to-date.


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