Which Senior Gold Miners Are Analysts Loving Lately and Why?

In this series, we’ll consider recommendations, target prices, estimates, and potential upsides and downsides for senior gold miners.

Anuradha Garg - Author

Mar. 22 2019, Published 11:24 a.m. ET

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Market sentiments

In this series, we’ll take a look at the market sentiments for senior gold miners. We’ll consider analysts’ recommendations, target prices, and estimates along with these miners’ potential upsides or downsides.

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Analysts are turning optimistic

Among senior gold miners (GDX) (GDXJ), analysts are the most optimistic about Newmont Mining (NEM). It has the most “buy” ratings at 63%, with 13% “sell” ratings. A year ago, only 50% of analysts had “buy” ratings on the stock.

NEM’s focus on debt reduction and the strong execution of its project pipeline are the likely drivers of analysts’ positive outlook. In the future, analysts and investors are looking forward to the execution of the company’s merger with Goldcorp (GG). In Could the Newmont-Goldcorp Merger Form ‘The Go-To Gold Equity’? we learned that Newmont is paying a 17% premium to acquire stock from Goldcorp.

Goldcorp has “buy” ratings from 44% of the analysts covering it, which is a decline compared to the 65% “buy” ratings it had at the end of November 2018. The company missed earnings expectations for the first three quarters of 2018, disappointing analysts and investors alike.

Bearish sentiment

Kinross Gold (KGC) comes in third with 40% “buy” ratings from the 20 analysts covering the stock. The ratings for the miner haven’t changed much in the last few months. Geopolitical issues, including its ongoing discussions with the government of Mauritania related to the expansion of its Tasiast Phase Two expansion, are keeping analysts on the sidelines.

Barrick Gold (GOLD) has “buy” ratings from only 14.0% of the analysts covering it. Analysts turned negative on the stock following its protracted issues in Tanzania and Argentina. However, they were happy about its merger with Randgold Resources. After the merger announcement in September 2018, Citi (C) analyst Alexander Hacking upgraded Barrick from a “neutral” to a “buy.” Analysts are now likely awaiting the execution of the company’s merger and the related synergy benefits to turn more positive on its stock.

Read Is Barrick Worth a Look after Its Merger with Randgold? for more on this topic.


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