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.
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.
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.
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.