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As Senior Gold Miners Underperform, Which Stocks Do Analysts Like?

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Performances of senior gold miners

North American senior gold miners (RING) had a strong run in 2016, with an average gain of 72% in the group as a whole. The gains in 2017 YTD (year-to-date) have been muted, however. As a group, senior gold miners have underperformed the index by losing 2.2%, compared with GDX’s gain of 5.5%.

There are, however, huge differences among the individual stocks’ performances. These companies’ 1Q17 results, their outlooks and management commentary, and other company-specific—including divestments, mine issues, and debt reduction—are the major reasons for this divergence.

Kinross Gold (KGC) rose 31% in 1H17. Goldcorp (GG), Newmont Mining (NEM), and Barrick Gold (ABX), on the other hand, had returns of -5.1%, -4.9% and -0.4%, respectively.

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Senior mining ratings

Among senior gold miners, analysts are most bullish on Newmont Mining (NEM), with 58.0% “buy” and 37.0% “hold” ratings. One year ago, 47.0% of analysts were recommending a “buy” for the stock.

Kinross has seen some recent upgrades and now has 47% “buy” ratings. A year ago, it had “buy” ratings from 32% of its analysts. Its strong YTD performance has encouraged analysts to turn slightly bullish on the stock.

Goldcorp (GG) and Barrick Gold (ABX) have “buy” ratings from 43% and 36% of their analysts, respectively.

Upward revision in target prices

According to the consensus estimates compiled by Thomson Reuters, Goldcorp has the highest potential upside, based on its target price at 33.4%. Barrick, Kinross, and Newmont have upsides at 28%, 20%, and 18%, respectively. All miners have seen declines in their target prices compared with their target prices one year ago.

To learn about senior gold miners’ 1Q17 results and 2017 outlook, check out Market Realist’s series Which Gold Miners Look Attractive after 1Q17 Earnings?

In the next part of this series, we’ll take a close look at the reasons behind the analysts’ recent revisions.

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