Why Analysts Are Bearish on These Gold Equities

Among senior and intermediate miners (JNUG) (GDX), New Gold (NGD), Barrick Gold (GOLD), Eldorado Gold (EGO), and Kinross Gold (KGC) have the fewest “buy” ratings from analysts, at 0.0%, 16.0%, 38.5%, and 40.0%, respectively.

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New Gold’s stock was the weakest gold stock last year, plunging 77% and reduced to a penny stock due to delays at its Rainy River mine. This year, the stock has returned 1%. The situation at Rainy River has been turning around slowly this year, but persistent concerns are preventing analysts from betting on the stock. Many analysts seem to be waiting on New Gold’s first-quarter results.

Only ~16% of the analysts covering Barrick Gold (GOLD) recommend “buy.” Analysts turned negative on the stock following issues in Tanzania and Argentina. Whereas its merger with Randgold Resources has been received positively, many analysts seem to be waiting to assess the post-merger situation. Deutsche Bank upgraded Barrick Gold (GOLD) from “hold” to a “buy” on its strong precious metal price forecasts and cost-cutting, synergy, and divesting opportunities.

Analysts’ views on Eldorado Gold (EGO) have deteriorated rapidly in the past year, though they have started turning around. EGO’s revised heap-leaching plan resulted in operations resuming at its Kisladag mine in Turkey. The revised heap-leaching plan also meant the suspension of its previously announced mill project. The suspension reduced the company’s risk profile and was seen as positive by analysts and investors. Geopolitical tensions are keeping analysts wary on Kinross Gold (KGC), which has earned “buy” ratings from only 40% of analysts covering it.