A Comparative Analysis of North American Gold Miners

(Continued from Prior Part)

It’s also important to gauge the market sentiment for gold miners based on analysts’ recommendations and target prices. In this part, we’ll look at recommendations and potential upside for gold miners based on analysts’ ratings.

As you can see in the above graph, of the analysts surveyed by Bloomberg, Goldcorp (GG) has the highest percentage of “buy” recommendations at 78%. Kinross Gold (KGC) has the lowest percentage of “buy” recommendations at 33%. Newmont Mining (NEM) has the lowest “sell” percentage recommendations at just 4%.

Yamana Gold (AUY) has the highest potential upside based on its current market price and average target price at close to 78% while Newmont Mining has the lowest upside at 35%.

While Credit Suisse upgraded its recommendation to “buy” for Yamana Gold, Scotia Capital downgraded its recommendation to “hold” recently.

Barclays recently upgraded Barrick Gold (ABX) to “hold” from “sell.” Mackie Research Capital upgraded it to “buy” from “hold.”

Recently, Scotia Capital and Deutsche Bank Research upgraded Newmont Mining from “hold” to “buy.”

RBC Capital Markets recently downgraded Kinross Gold to “sell” from “hold.”

Mackie Research Capital, Morgan Stanley, and TD Securities recently upgraded Goldcorp from “hold” to “buy.”

Of the five companies, the EBITDA (earnings before interest, tax, depreciation, and amortization) estimates for the next year have only risen for Newmont Mining. Kinross saw the largest fall in estimates at 29%. Yamana, Goldcorp, and Barrick’s estimates fell by 25%, 20%, and 15%, respectively.

Investors who don’t want to pick up individual companies can invest in gold miners through the Market Vectors Gold Miners ETF (GDX). This ETF invests in senior and intermediate gold miners. Newmont forms 6.40% of its holdings. The SPDR Gold Shares (GLD) provides exposure to spot gold prices.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Comparative Analysis: How Have Gold Miners Performed This Year?
• Part 2 - Comp: Do Gold Miners with an Exposure to Copper Face Downside?
• Part 3 - Comp: A Look at Gold Miners’ 2Q15 Production Profile