AngloGold Ashanti stock initiated with buy rating at Roth/MKM

Roth/MKM initiated coverage on AngloGold Ashanti (NYSE:AU) with a buy rating and a $52.00 price target on Thursday, targeting upside from the current price of $45.87. The gold miner, which has delivered an impressive 103% return year-to-date, caught the firm’s attention with its portfolio restructuring and growth strategy. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value model.

The firm highlighted AngloGold’s recent efforts to streamline its asset portfolio, focusing on expanding Tier 1 assets while divesting smaller operations. This strategy materialized with the company’s acquisition of Centamin PLC and its Sukari mine in November 2024, followed by the sales of its Côte d’Ivoire projects and Sierra Grande mine. The company’s strong financial position, with a healthy current ratio of 2.34 and moderate debt-to-equity of 0.33, supports this strategic expansion.

Roth/MKM noted that the Sukari mine acquisition aligns with AngloGold’s Tier 1 asset criteria, while the subsequent divestments represent lower-tier assets that failed to meet management’s investment standards. The firm suggested additional mergers and acquisitions remain possible as suitable opportunities arise.

AngloGold’s undeveloped assets portfolio received particular attention from the research firm, especially its Southern Nevada properties. The North Bullfrog, Silicon, Mother Lode, and Silicon deposits collectively contain over 20 million ounces of gold in existing resources.

The development of these Nevada assets "should provide significant production growth" for AngloGold Ashanti, according to Roth/MKM’s analysis of the company’s future prospects. With revenue projected to grow by 58% this fiscal year and 13 additional bullish indicators available on InvestingPro, the company’s growth trajectory appears promising.

In other recent news, AngloGold Ashanti reported first-quarter revenue of $1.93 billion, surpassing analyst expectations of $1.86 billion. This increase was attributed to a 22% rise in gold production, reaching 720,000 ounces, and a 39% increase in the average gold price received. Despite the revenue beat, earnings per share came in at $0.88, missing estimates by $0.04. The company also generated free cash flow of $403 million, significantly up from $57 million the previous year, and declared a quarterly dividend of 12.5 cents per share. Additionally, AngloGold Ashanti announced an agreement to sell its Mineração Serra Grande mine in Brazil for $76 million, with deferred payments linked to a 3% net smelter return on the mine’s resources. This sale is part of the company’s strategy to streamline operations and improve financial flexibility. The transaction is expected to close in the third quarter of 2025, pending several conditions, including antitrust approval from Brazilian authorities. Investors have responded positively to these developments, reflecting confidence in the company’s strategic moves.

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