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Goldman Sachs Upgrades Gold/Silver Stocks to Neutral; Barrick (ABX) Upped to Buy

April 22, 2014 6:54 AM EDT
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Price: $13.54 --0%

Rating Summary:
    5 Buy, 17 Hold, 2 Sell

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Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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Goldman Sachs is becoming more constructive on gold and silver equities and as a results is raising their coverage view to Neutral.

Analyst Andrew Quail said, "After underperforming the SPX by 21% since September 2013, gold and silver equities now appear more fairly valued, offering an average 7% total upside. We raise our coverage view to Neutral as we believe (1) more responsible capital allocation, (2) successful cost cutting initiatives, (3) a refocus on maximizing free cash flow, and (4) sound strategic portfolio optimization should improve the positioning of our companies offsetting our below-consensus outlook for commodity prices (we forecast $1,200/oz for gold from 2015 onwards)."

The firm is upgrading Barrick Gold Corp. (NYSE: ABX) to Buy, while initiating coverage on five others.

On Barrick Gold the analyst said the company "has actively shrunk to profitability over the past twelve months, focusing on its key FCF generating operations and divesting non-core strategic assets. Following the equity raise in 2013, we believe the company’s financial flexibility has significantly improved."

B2Gold Corp. (NYSE: BTG) was initiated at Buy with a C$4.20 price target. The analyst said, "BTO.TO has imminent production growth from Otjikoto project which enhances the company’s FCF generation and should fund future development."

Alamos Gold Inc. (NYSE: AGI) was initiated at Neutral with a C$10 price target.

Franco-Nevada Corporation (NYSE: FNV) was initiated at Neutral with a C$52 price target.

Detour Gold (DGC.T) was initiated at Neutral with a C$9.50 price target

Buenaventura (NYSE: BVN) was initiated at Neutral with a $14 price target.

The firm also maintains Buy ratings on Goldcorp, Inc. (NYSE: GG), Yamana Gold, Inc. (NYSE: AUY) and Silver Wheaton (NYSE: SLW). They recommend avoiding sell rated names IAMGOLD Corp. (NYSE: IAG), PAN American Silver Corp (NASDAQ: PAAS) and Eldorado Gold Corp. (NYSE: EGO).



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