TD Newcrest Upgrades Barrick Gold (ABX) to Action List Buy
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TD Newcrest upgrades Barrick Gold Corp. (NYSE: ABX) from Buy to Action List Buy.
TD analyst says, "We have several reasons for making Barrick our top pick among the senior gold producers: 1. The 42% return to our target price is the highest within the senior producer group. 2. Barrick’s P/NAV, at 1.49x, is below the senior average of 1.55x and only slightly higher than Kinross at 1.41x and Yamana at 1.42x. 3. Barrick has amongst the best NAV sensitivity to higher LT gold price assumptions – increasing our LT gold price forecast to US$1,200/oz would increase our Barrick NAV by 50.7%, which compares to the senior/mid tier average of +39.6%. 4. The company has the lowest P/CF multiple within the senior group at just 8.9x, which is 30% below the senior average of 12.7x. 5. Barrick, in our view, provides lower risk equity exposure to gold. As has been demonstrated twice this week, smaller companies with rapid growth profiles often face development challenges. Barrick’s large production base and wide geographic reach spreads its risk and lessens the impact of production misses at individual operations. Barrick has consistently met or exceeded consensus forecasts since Q4/07. 6. We believe that 2009 represents something of a low water mark for the company with respect to production. With the Buzwagi mine now in production and Cortez Hills entering production in 2010, we expect production to increase 7% YoY in 2010 to 8.1 million ounces. By 2013, we are forecasting that production should increase by 17% vs. 2009 to 8.6 million ounces. Most of this growth will come from projects that are now under construction. 7. We expect that Barrick should attract increasing attention from generalist fund managers now that the company is effectively unhedged."
To see more analyst ratings on ABX Click Here.
Barrick Gold Corporation primarily engages in the exploration, development, production, and sale of gold worldwide.
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