Deutsche Bank reported on Wednesday that it has upgraded Barrick Gold Corporation (ABX
) to “Buy.”
The firm has raised its rating on ABX from “Hold” to “Buy,” and has raised the company’s price target from $20 to $30. This price target suggests a 40% increase from the stock’s current price of $18.03.
Analyst Jorge Beristain noted that the price target was being re-set at 0.8x DBe NPV versus 0.6x previously “as we believe that the risk of an equity issue has receded, thanks to a comprehensive program to shore up the balance sheet unveiled with 2Q13 results and follow through.”
Beristain added, “Barrick's plan includes $4bn in capex cuts/deferrals over 4 years, an immediate 6% reduction in cash operating costs and a 15% cut to exploration expenditures. A 75% reduction in dividends will save a further $600m per year. A portfolio review should see some marginally profitable mines (defined as those with AISC>$1,000/oz) either shuttered or sold. In August, the company unveiled the sale of its Yilgarn South (YS) three-mine 425k oz p.a. complex (5.5% of attributable volumes) for $300m. We look for Barrick's divestiture program to continue with Plutonic (110k oz @ $1,134/oz AISC) and Porgera (464k oz @ $1,317/oz AISC) gold mines, with the former bringing in $45-77m and proceeds from the latter falling in the very broad $70-275m range.”
Barrick Gold shares were up 32 cents, or 1.77%, during pre-market trading Wednesday. The stock is down 49% YTD.
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