Analysts have released updated ratings on some gold mining stocks that are traded on the American stock markets.
RBC Capital Markets (RY) downgraded shares of the biggest producer of gold in the world on Nov. 1 to Sector Perform from a previous rating of Outperform.
This has been the third downgrade Barrick Gold Corp. got over the last 7.5 months and was preceded by other two downgrades.
On Oct. 26, Barrick Gold Corp. was downgraded by Credit Suisse Group (CS) from Outperform to Neutral and on July 6, the Canadian gold producer was downgraded by BMO Capital Markets from Perform to Neutral.
Source: Yahoo Finance
Over the same span, Barrick Gold Corp. got three upgrades: Berenberg Bank released a Hold rating on shares of Barrick Gold this calendar year on June 29; RBC Capital Markets (RY) released its rating of Outperform on March 16 and Mackie Research Capital Corp. released on a note dispatched on Oct. 31 a Hold rating on its shares.
As reported by StreetInsider.com, with its new rating dated Nov. 1, RBC Capital Markets also decreased by 14.3% its price target on Barrick Gold Corp. to $18 per share from a previous price target of $21 per share.
Source: Yahoo Finance
The last two downgrades dragged Barrick Gold Corp.’s average target price down nearly 8% from an average price of $20.85 as of July 7, to a current average price of $19.27 per share. The latter is a mean of 20 estimates of analysts who were surveyed. These estimates range between a low of $14 per share and a high of $14 per share.
The new average target price of $19.27 represents a 37.6% upside from the current market valuation of $14 per share of Barrick Gold Corp.
Barrick Gold Corp. is currently trading at $14 per share, with a market capitalization of $16.18 billion, a price-book ratio of 1.77, a price-sales ratio of 1.88, a price-earnings ratio of 7.21 and an EV-Ebitda ratio of 3.59.
Barrick Gold Corp. has a forward price-erarnings ratio of 16.95 and a forecasted EPS of 74 cents for full fiscal 2017 and a forecasted EPS of 81 cents for full fiscal 2018. These two estimates are averages.
RBC Capital Markets has also released a new rating on shares of Goldcorp Inc. (GG, Financial) on Nov. 1.
The Canadian firm has increased its rating from Sector Perform to Outperform and – as reported by StreetInsider.com – it has also set a target price of $18 per share of the Canadian gold producer.
This was the fourth downgrade Goldcorp received over the last 12 trading months. It was preceded by another upgrade released by Canaccord Genuity Group Inc. (CF) on Sept. 29 (Hold to Buy). The other two downgrades were received by RBC Capital Markets on March 16 (to Sector Perform) and by Canaccord Genuity last calendar year on Oct. 24.
Source: Yahoo Finance
During this period, Goldcorp got 2 downgrades: the first one was from BMO Capital Markets (to Market Perform) last year Dec. 19 and the second one from the National Bank Financial (from Outperform to Sector Perform) this year July 24.
Goldcorp Inc. has a current target price per share of $16.93 per share. This is an average of 18 estimates. These estimates range between a low value of $12 per share and a high price of $25 per share of Goldcorp.
Source: Yahoo Finance
The average target price currently represents a 29.2% upside in the current market value of one share of Goldcorp.
Goldcorp Inc. (GG, Financial) is currently trading at $13.1 per share, with a market capitalization of $11.24 billion, a price-book ratio of 0.84, a price-sales ratio of 3.17 and a price-earnings ratio of 20.89.
Goldcorp Inc. has also a forward PE ratio of 25.51 and for full fiscal 2017 and 2018 analysts forecast an EPS of 43 cents and 51 cents. The last two figures are averages.
Year to date Barrick Gold Corp. and Goldcorp Inc. lost 4% and 12%.
Over the same span, Barrick Gold Corp. underperformed the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX) by nearly 20% while Goldcorp Inc. outperformed the gold stock index by 11%.
The last downgrade may plunge Barrick Gold Corp.’s market value further and even below its 52-week low of $13.81 per share. Then Mr. Market will knock at the investors’ door with prices that may represent an opportunity to either increase or start a position in Barrick Gold Corp. and get exposure to changes in the gold price through holdings in the biggest producer of the yellow metal in the world.
Disclosure: I have no positions in any security mentioned in this article.
