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Which Senior Gold Miners Are Analysts Betting On?

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Performances of senior gold miners

As a group, the average gains of North American senior gold miners (GDX) (RING) have been muted. YTD (year-to-date), they have returned just 7.7%. In 2016, the average return generated by the senior gold miner group was 72%. These miners have underperformed the gold miners’ benchmark index (GDX), and gold prices (GLD), which have gained 12.1% and 10.3%, respectively.

These miners have underperformed the gold miners’ benchmark index (GDX) and gold prices (GLD), which have gained 12.1% and 10.3%, respectively, YTD.

There are wide variances among these individual stocks’ performances due to the companies’ operational results, their outlooks, and management commentaries. Other company-specific factors such as divestments, mine issues, and debt reduction also play a role.

Kinross Gold (KGC) has given the highest YTD return of 37%. Newmont Mining (NEM), Barrick Gold (ABX), and Goldcorp (GG) rose 11.0%, 3.3%, and -2.3%, respectively.

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Senior mining ratings

Newmont Mining is the most favored stock among analysts in the senior gold miner universe, with 58.0% “buy” and 37.0% “hold” ratings. The analysts’ bullishness on the stock has risen. Until one year ago, 47.0% of analysts were recommending a “buy” for the stock.

By comparison, 44% of the analysts have recommended a “buy” for Kinross. One year ago, Kinross had “buy” ratings from 32% of its analysts. Its strong operational performance and project execution have encouraged analysts to turn slightly bullish on the stock.

Barrick Gold (ABX) and Goldcorp (GG) have “buy” ratings from 42% and 45% of their analysts, respectively.

Upward revisions in target prices

According to data compiled by Thomson Reuters, GG has the highest potential upside, based on its target price, at 29.4%. Barrick and Kinross have upsides of 24.4% and 22.6%, respectively. The upside for Newmont is just 8.6%.

To learn more about senior gold miners’ 2Q17 results and 2017 outlook, check out Market Realist’s series A Comparative Analysis of Gold Miners’ 2Q17 Earnings.

Now let’s take a closer look at the reasons behind the analysts’ recent revisions.

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