How Do Analysts View South African Gold Miners in 2017?



Performances of South African miners

The first half of 2016 was exceptional for South African gold miners, and their stock prices rose significantly. The uptrend was driven by the rise in gold prices due to its safe-haven bid and the weakness of the South African rand. But the rally took a break after June 2016. Gold prices slowed down, and local currencies strengthened.

Harmony Gold Mining (HMY) outperformed its South African peers with a year-to-date rise of 108.5% in 2016. Its higher operating leverage led to higher gains compared to its peers.

AngloGold Ashanti (AU) and Sibanye Gold (SBGL) have risen 41.0% and 15.0%, respectively. Gold Fields (GFI) rose just 4.0%.

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South African gold miners’ ratings

Among South African gold miners, AngloGold Ashanti is analysts’ favorite. It has the highest percentage of “buy” recommendations at 53.0%. Harmony Gold has the lowest percentage of “buy” recommendations at 10.0%. For Gold Fields, most of the ratings are split equally between “buy” and “sell” at 36.0% each.

Sibanye Gold has “sell” ratings from 15.0% of analysts. The above graph shows brokers’ recommendations and the percentage of upsides or downsides from the current prices.

Changes in ratings and target prices

Harmony Gold’s target price represents a potential downside of 20.4%. Gold Fields and Sibanye Gold have higher upside potentials of 32.0% and 44.0%, respectively. AngloGold Ashanti also has a significant upside potential of 27.0%.

You can consider the VanEck Vectors Gold Miners ETF (GDX) and the SPDR Gold Shares (GLD) to get exposure to gold miners and spot gold prices. AngloGold Ashanti forms 4.5% of GDX’s holdings.

In the next part of this series, we’ll look at the key ratings changes for the above miners.


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