So far in this series, we’ve analyzed gold miners’ key operating and financial metrics. In this article, we’ll discuss the market sentiments for these companies. We’ll look at analysts’ recommendations, target prices, and potential upsides or downsides for the gold miners under discussion.
Analysts turning optimistic
Among the senior gold miners under review (GDX) (GDXJ), analysts are most optimistic about Goldcorp (GG). It has the most “buy” ratings at 65%, with only 5% “sell” ratings. A year ago, only 48% of analysts had “buy” ratings on the stock. While GG’s production growth remains muted, its current long-term approach to increase its reserves and production and to improve its unit costs is turning analysts around on its stock. It has a potential upside of 40.2% based on its consensus target price.
Newmont Mining (NEM) ranks second in terms of “buy” ratings, with 55.6% of analysts recommending “buys” on its stock. The company’s focus on debt reduction and the strong execution of its project pipeline are the likely reasons for analysts’ positive outlook.
Kinross Gold (KGC) stock rose the most in 2017 on the strength of its operational performance and project execution. This encouraged analysts to increase their “buy” ratings on the stock. While one year ago, it had “buy” ratings from 21.1% of the analysts covering it, currently, its “buy” ratings have more than doubled to 44.4%. It has an upside potential of 49.2% based on its current target and stock price.
In contrast to the three miners we mentioned above, positive sentiments for Barrick Gold (ABX) have been eroding lately. It currently has “buy” ratings from only 20.8% of analysts compared to 48% at the end of March 2017.
The company’s mine issues in Argentina and Tanzania are affecting the sentiments surrounding its stock. Its latest production and cost guidances also disappointed analysts and investors.