Gold prices hold sharp gains as soft US jobs data fuels Fed rate cut bets
On Wednesday, UBS analyst Daniel Major upgraded shares of Barrick Gold Corp. (NYSE:GOLD) from Neutral to Buy, setting a price target of $22.00. Major’s decision to upgrade the mining company’s stock is influenced by a positive outlook on gold and the stock’s recent performance compared to its peers. According to InvestingPro data, Barrick Gold has demonstrated strong financial health with an overall score of 3.23 out of 5, labeled as "GREAT," and has maintained dividend payments for an impressive 39 consecutive years.
Barrick Gold has experienced a notable decline in its stock value both in absolute terms and relative to other gold stocks, as indexed by the GDX (NYSE:GDX). According to Major, Barrick Gold now trades at approximately 5 times its estimated 2025 EV/EBITDA, assuming its mines in Mali, which are currently closed, do not reopen. This valuation represents a roughly 30% discount compared to Barrick Gold’s five-year average and a 50% and 20% discount versus its competitors, Agnico Eagle Mines (NYSE:AEM) and Newmont Corporation (NEM), respectively. InvestingPro analysis suggests the stock is currently undervalued, with metrics showing a P/E ratio of 14.7 and strong liquidity with a current ratio of 2.89.
Major’s analysis suggests that Barrick Gold’s guidance for 2025 might be conservative. He indicates that a potential restart of operations in Mali could serve as a positive catalyst for the company’s stock. The analyst’s upgrade reflects a belief in the intrinsic value of Barrick Gold and its attractiveness to investors at the current price point. Recent financial data from InvestingPro shows revenue growth of 13.38% in the last twelve months, with the company maintaining a healthy gross profit margin of 38.39%.
Barrick Gold’s stock adjustment follows a period of underperformance, which has now been identified by UBS as an opportunity for investors. The upgrade to a Buy rating implies that UBS sees potential for growth and recovery in Barrick Gold’s stock performance, especially if the company’s suspended operations in Mali resume.
The new price target of $22.00 set by UBS represents a vote of confidence in Barrick Gold’s future financial performance and its ability to capitalize on the current gold market conditions. Major’s comments highlight the firm’s constructive stance on gold as a commodity and Barrick Gold’s competitive positioning within the industry.
In other recent news, Barrick Gold Corporation reported fourth-quarter earnings that aligned with analyst expectations, with adjusted earnings per share of $0.46. However, the company’s revenue of $3.65 billion fell short of the projected $3.95 billion. Despite this revenue miss, Barrick Gold’s gold production exceeded estimates, reaching 1.08 million ounces compared to the anticipated 1.05 million ounces. The company declared a quarterly dividend of $0.10 per share and repurchased 28.675 million shares in 2024, including 21 million in the fourth quarter. Additionally, Barrick Gold reached a preliminary agreement with the Malian government to resolve a dispute over the Loulo-Gounkoto mine, involving a payment of approximately $438 million. This agreement is pending formal approval and aims to resume operations at the contested site. Meanwhile, Raymond (NSE:RYMD) James adjusted Barrick Gold’s price target from $24.00 to $23.00 but maintained an Outperform rating, noting the company’s strong asset base and strategic partnerships. The firm’s analysis highlighted Barrick’s control over high-quality mines and a joint venture with Newmont in Nevada, despite increased jurisdictional risks from its Randgold (LON:RRS) acquisition.
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