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Citigroup Neutral On Gold-Mining Sector, Lukewarm On Barrick, Goldcorp

Kitco News

Isabelle OHara /

(Kitco News) - The gold market is getting a little bit of love from Citigroup but not a lot, as the U.S. bank sees some upside potential but remains neutral on the precious metal and the mining sector.

In a report released Wednesday, Citi equity analyst Andrew Hacking reviewed his position on major gold producers, seeing the best potential in Barrick Gold (NYSE: ABX, TSX: ABX). The analyst raised his outlook for the world’s largest gold producer to neutral from sell. However, he also cut his price target on Barrick to $12 from $13. However, Citi’s new target still represents a 12% increase in Barrick shares from current prices, last trading at $10.75 a share.

In his report, Hacking said that he is neutral on the mining sector even though the risk for the price of gold is now "skewed to the upside."

Hacking said that Barrick is a compelling investment and could be nearing a bottom as gold prices hold $1,200 an ounce. He added that it has the potential to outperform if it can "rebuild" investor trust.

According to a report from Reuters, Hacking, while leaving his rating unchanged on Goldcorp (NYSE: GG TSX: G), said that the producer is “poised to outperform the sector as it improves operations, execution on projects.”

Citigroup cut its price target for Goldcorp to $14 from $16. Still, the bank’s new target represents a 25% increase from the current price at $11.18 a share.

Hacking was not optimistic on Agnico Eagle (NYSE: AEM, TSX: AEM) as he cuts his price target to $38 per share from the previous target of $45. Hacking said that he does not see any upside for the company at the current valuation, which is at a premium to peers. Agnico shares last traded at $35.96

Finally, Citi dropped its price target for Newmont Mining Corp (NYSE: NEM). to $36 from $42. The bank said that it does not expect the company to strongly outperform its peers. Newmont Mining shares last traded at $31.80.

Hacking’s outlook for the mining sector comes as gold prices manage to hold critical support above $1,200 an ounce, after falling from a recent two-week high. December gold futures last traded at $1,212 an ounce, down 0.20% on the day.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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