Analysts’ recommendations and ratings are some of the most important market sentiment indicators for investors to consider. 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. When everyone is bearish and dumping stocks, it could mean a bottom and better times ahead, and vice versa.
Paring back expectations
Among senior gold miners (GDX) (GDXJ), analysts are most bullish on Newmont Mining, giving it 58% “buy” and 37% “hold” ratings. Goldcorp (GG) comes in second with 54% of 24 analysts recommending a “buy.” Bullishness among analysts corrected steeply last year. At the beginning of 2016, 73% of analysts rated Goldcorp a “buy.” In response to Goldcorp’s disappointing production growth in 2016, analysts have pared back their estimates and ratings.
Agnico Eagle Mines (AEM) has “buy” ratings from 44% of analysts covering the stock. Its popularity among analysts, however, has fallen drastically since the start of 2016. It had 78% “buy” ratings and 9% “sell” ratings at the beginning of 2016.
Barrick Gold (ABX) has 44% “buy” ratings, 48% “hold” ratings, and 8% “sell” ratings. A year before, it had no “sell” ratings. Since the beginning of 2016, its target price has risen 111% to $19.90.
Analysts’ opinions are tilted toward a “hold” for Kinross Gold (KGC), with 68% of them rating it a “hold.” Its target price is $4.47, which represents a rise of 75% in the last year.
Half of the analysts recommend a “hold” for Yamana Gold (AUY). The target price of $4.70 implies an upside potential of 41%. Its recent announcement regarding the Brio Gold spin-off has been a positive catalyst for the stock. In the next article, we’ll look at revenue expectations for these miners.