Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
On Friday, Jefferies analysts maintained their Buy rating and $26.00 price target for Barrick Gold Corp. (NYSE:GOLD), emphasizing the company’s potential for cost reduction and value in its copper business. Currently trading at $19.56, the stock has shown impressive momentum with a 27% gain year-to-date. The analysts project that Barrick Gold’s "Real Costs" could stabilize at approximately $1,250 per ounce, driven by the expansion of its copper segment. This adjustment is anticipated to yield a free cash flow (FCF) of around 20% at the current spot prices. According to InvestingPro data, the company maintains strong financial health with a current ratio of 2.89x, indicating robust liquidity.
The analysis by Jefferies suggests that Barrick Gold’s copper enterprise could be valued at approximately $14 billion. This valuation indicates that the gold operations of the company are being traded at a significant discount when compared to its peers. Specifically, the gold business is valued at over 50% less than the two largest gold mining companies. InvestingPro analysis reveals the stock trades at an attractive P/E ratio of 16x and has maintained dividend payments for 39 consecutive years, demonstrating consistent shareholder returns.
Barrick Gold’s current trading metrics also highlight its undervaluation relative to industry counterparts. The stock is trading at 0.5 times its price to net asset value (P/NAV) at spot prices, which is lower than its competitors such as Agnico Eagle Mines Limited (NYSE:AEM) at 1.0 times and Newmont Corporation (NEM) at 0.6 times P/NAV.
The analysts at Jefferies reasserted their Buy rating, citing the attractive valuation of the company and the additional benefit of exposure to the copper market. They believe that the market has not fully recognized the intrinsic value of Barrick Gold’s combined gold and copper businesses, presenting a favorable opportunity for investors. The maintained price target of $26.00 reflects their confidence in the company’s prospects and anticipated performance.
In other recent news, Barrick Gold Corporation reported fourth-quarter earnings that aligned with analyst expectations, posting an adjusted earnings per share of $0.46. However, the company’s revenue of $3.65 billion fell short of the anticipated $3.95 billion. Barrick Gold’s gold production reached 1.08 million ounces, slightly exceeding the estimate of 1.05 million ounces. In a separate development, Barrick Gold reached a significant agreement with the Malian government, potentially resolving a lengthy dispute over the Loulo-Gounkoto mine. This agreement involves a compensation payment of approximately $438 million to Mali, which is expected to facilitate the resumption of mining operations.
Furthermore, UBS upgraded Barrick Gold’s stock rating from Neutral to Buy, setting a price target of $22.00, citing a positive outlook on gold and Barrick’s relative performance. In contrast, Raymond (NSE:RYMD) James adjusted its price target for Barrick Gold to $23.00, down from $24.00, while maintaining an Outperform rating, noting the company’s strong cash flow from high-quality assets. Meanwhile, Goldman Sachs raised its gold price forecast, highlighting continued strong demand, which has positively impacted gold mining stocks, including Barrick Gold. These recent developments reflect a mix of strategic moves and market conditions influencing Barrick Gold’s current and future operations.
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