Analysts Warn About Barrick Gold's Earnings Beat

Barrick Gold Corporation ABX is sharply higher, gaining more than 3 percent following Wednesday's earnings report. The company reported EPS of $0.15, a $0.01 beat.

However, Wall Street analysts are not as constructive on the company’s future. Morgan Stanley and Deutsche Bank reiterated Equal-weight and Hold ratings ahead of the company’s conference call.

Morgan Stanley noted that the EPS beat was based on a tax recovery and that the company’s costs were higher than expectations. Additionally, though plans to reduce $3 billion in debt would be a net positive, the analysts called the plans “ambitious” and said that they expect the plan will require “considerable actions” by the company. Further, though guidance was in line, Morgan Stanley is less confident that it can be accurately forecast at the moment.

Deutsche Bank analysts are also skeptical of Barrick’s $3 billion debt reduction. “Given limited appetite for Gold equities, a ‘$3bn’ de-leveraging goal mostly via asset sales in accretive manner is easier said than done,” the analysts said. The analysts pointed to Barrick’s $3 billion write-down of its copper assets as another point of concern.

Deutsche Bank has a $13 price target on the stock.