Barrick Gold (ABX) received an investment-rating upgrade Monday from RBC Capital Markets even as the firm slightly reduced its price target on the gold miner’s stock.
The new price target is $16 per share, down from $17 each. This compares with a Friday closing price for the miner’s US shares of $11.82. The shares edged up 0.7% in recent Monday pre-market trading to $11.90.
RBC noted to clients that Barrick Gold’s shares have underperformed the VanEck Vectors Gold Miners ETF (GDX) by 14% over the past four months, saying the underperformance “likely reflects the expected declining production profile, higher-than-expected long-term [all-in-sustaining costs] guidance, and the overhang from the Acacia/Tanzania dispute.”
However, the firm said, “we believe much of the downside risk is priced in and the current share price decline is overdone.”
RBC sees the stock as having an “attractive return to target despite moderated forecasts.” It also highlighted that Barrick Gold’s free cash flow supports its debt reduction and project development.
In turn, the firm concluded, “the relative valuation provides investors with an attractive entry point.”