Which Senior Gold Miners Are Analysts Watching?



Performances of senior gold miners

Senior North American gold miners (RING) had a strong run in 2016. In the last few months of 2016, miners attributed some of their gains to Donald Trump’s win and the Fed’s rate hike decision. Overall, senior miners rose 72.3% in 2016 compared to 48.5% for the VanEck Vectors Gold Miners ETF (GDX).

Of the senior miners, more leveraged miners such as Barrick Gold (ABX) and Newmont Mining (NEM) outperformed less leveraged stocks such as Goldcorp (GG).

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Bullish on Newmont Mining

Among the senior gold miners, analysts are most bullish on Newmont Mining, with 58.0% “buy” and 37.0% “hold” ratings. One year earlier, 45.0% of analysts were recommending a “buy” for the stock. Along with higher gold prices, a reduction in Newmont’s debt in 2016 encouraged investors to turn positive on the stock. Its target price has also seen an impressive change with an upward revision of 70.0% to $39.90.

Goldcorp (GG) comes in second with 54.0% of the 24 analysts recommending a “buy.” The bullishness among analysts has steeply corrected over the last year. At the beginning of 2016, 73.0% of analysts rated Goldcorp a “buy.”

In response to Goldcorp’s disappointing production growth in 2016, analysts have pared back their estimates and ratings. Since the company was a laggard in 2016, they’re probably expecting it to catch up to its peers.

Upward revision in target prices

According to consensus analyst estimates compiled by Thomson Reuters, Barrick Gold (ABX) has 44.0% “buy” ratings, 48.0% “hold” ratings, and 8.0% “sell” ratings. A year before, it had no “sell” ratings. Since the beginning of 2016, its target price has risen 111.0% to $19.90.

Analysts’ opinions are tilted toward a “hold” for Kinross Gold (KGC), with 68.0% of them rating it a “hold.” Its target price is $4.47, which represents a rise of 75.0% in the last year.

For an in-depth review of senior miners’ ratings, be sure to read Which Gold Miners Offer a Potential Upside after 3Q16 Results? In the next part, we’ll take a close look at the reasons for analysts’ recent revisions.


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