Berenberg Starts Barrick Gold (ABX) at Sell
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Berenberg initiates coverage on Barrick Gold (NYSE: ABX) with a Sell rating and a price target of $15.20.
Analyst Yuriy Vlasov commented, "Barrick is the world’s largest gold producer, generating 6.1moz of gold and 511mlb of copper a year (2015). Barrick is headquartered in Toronto, Canada, and its shares are listed in New York and Toronto. The company’s operational assets are scattered across the globe, from Canada to Australia. Although Barrick is valued in line with the gold sector (2016 EV/EBITDA of 7.6x), we believe its gold production is set to decline over the next three years, capping FCF/dividends and leaving the stock at the mercy of price fluctuations."
He added, "The core Barrick assets, located in the US, Canada and South America, contribute 65% of its gold production (2015). Among its other gold-producing assets, the company controls 63.9% (and consolidates the results) of African-based London-listed gold miner Acacia Mining. Barrick’s 2P reserve base contains 47.2moz of gold (attributable) with a head grade of 2.1g/t. While reporting 2015 results, Barrick guided for a 21% lower production-range target (4.6- 5.1moz, 2018). Capex, meanwhile, is set to grow by 14% over the same period."
Shares of Barrick Gold closed at $19.04 yesterday.
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