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Jefferies initiates Barrick Gold with buy, sets $21 stock target

EditorNatashya Angelica
Published 02/28/2024, 04:48 PM
© Reuters

On Wednesday, Jefferies initiated coverage on Barrick Gold Corp. (NYSE: NYSE:GOLD) with a Buy rating, setting a stock price target of $21.00. The firm acknowledges that Barrick Gold has faced challenges in meeting guidance and contended with cost inflation in recent years, which may have impacted the company's credibility.

Despite these issues, the analyst notes positive developments that could enhance the company's performance in the future, particularly starting in 2025.

The company's efforts include improvements at the Sage infrastructure for Turquoise Ridge and the accelerated development at Goldrush. Although the expansion of Pueblo Viejo has experienced delays due to equipment failures, it is expected to contribute significantly in the latter half of the year.

The resumption of operations at Porgera is also anticipated to have a more substantial impact on the company's results in 2025.

Jefferies suggests that Barrick Gold has the potential to reverse the trend of increasing unit costs by 2025. The current market valuation of the stock at 0.75 times the firm's net asset value (NAV) and 4.8 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) is seen as an attractive entry point for investors.

The analyst believes that a year of meeting planned targets could boost market confidence in Barrick Gold's growth and margin expansion, drawing attention to the quality and potential of its assets, which are considered some of the best in the industry.

The price target of $21.00 is based on a projected 1.0 times price to NAV and 6.0 times EV/EBITDA, with a 70/30% weighting applied to these metrics. This new coverage and price target reflect a positive outlook for Barrick Gold, as the company works toward addressing its operational challenges and capitalizing on its strategic initiatives.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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