Deutsche Bank Updates Outlook on Gold Sector; Upgrades Harmony (HMY) to Buy - AngloGold Ashanti (AAUK) Remains Sector Pick

July 6, 2009 7:34 AM EDT

Deutsche Bank upgrades Harmony (NYSE: HMY) to Buy.

Deutsche analyst says, "We have upgraded our short- and medium-term (CY09e-CY13e) gold price profile; however, our USD600/ounce long-term gold price remains unchanged. We expect gold to peak at USD933/ounce in FY09 before declining steadily to our long-term USD600/ounce estimate. However, the stronger-than-expected ZAR in CY09e, higher-than-expected SA input cost inflation, and other company-specific issues have offset the positive impact of our gold price estimate revisions. We upgrade HMY to a Buy; AngloGold Ashanti (Nasdaq: AAUK) remains our preferred sector pick."

"Concerns regarding HAR’s strategy following its bid for Pamodzi’s FS assets, disappointing operating guidance, and the impact of a strong ZAR have caused HAR to underperform AAUK and Gold Fields (NYSE: GFI) by 36% and 29%, respectively, y-t-d. Even though we remain sceptical about HMY meeting future production targets, we believe this is now well reflected in its share price. Given that HMY is 1) trading 23% below our PT, 2) is most geared to an expected weakening in the ZAR, 3) expects higher production in FY10 as Hidden Valley ramps up, and 4) is likely to pay a dividend in FY10, we upgrade our recommendation to Buy."

To see more analyst ratings on HMY Click Here.

Harmony Gold Mining Company Limited (Harmony) is a gold producer.

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