In July 2016, JPMorgan Chase (JPM) turned positive on South African gold miners. It upgraded Harmony Gold Mining (HMY) from “neutral” to “overweight.” In the same report, it also upgraded Gold Fields (GFI) to “neutral” from “underweight.” It reiterated its “overweight” rating on AngloGold Ashanti (AU) and Sibanye Gold (SBGL).
JPM’s upgrades for South African miners came on the back of its bullish view on gold prices combined with a weaker South African rand.
Citigroup (C) upgraded SBGL from a “sell” to a “neutral” rating on October 12, 2016.
Macquarie upgraded Harmony Gold to “neutral” from “sell” on July 5, 2016. Of all the South African gold miners, AngloGold is the only one with an “outperform” rating from Macquarie.
Deutsche Bank (DB) has downgraded AngloGold from “buy” to “hold” and upgraded Harmony Gold from “hold” to “buy.” The upgrade for Harmony was due to the stock’s high leverage to rand gold prices. For AngloGold, DB believes its valuation and the risk-to-reward outlook justifies a “hold” rating. DB maintained its “hold” rating for Gold Fields and Sibanye Gold in the same note.
One group of precious metal companies has lagged behind the year-to-date rally in gold and silver prices. We’ll look at the ratings for this group in the next part of the series.