Goldcorp Might've Just Hit Bottom, Barclays Says

In a report published Friday, Barclays analysts maintained an Overweight rating on Goldcorp Inc. GG, with a price target of $25. In the report Barclays noted, "Goldcorp has had a challenging start to the year as the company missed earnings expectations for Q1, had a weak production quarter and had net debt increase by $413 mln in Q1/15 vs. Q4/14 as it drew from its credit facility for working capital requirements. Goldcorp reported its 1Q adj. EPS at $0.01, missing the Barclays and consensus estimates. At the close of the first quarter, the company had $3.5 bln in net debt, up from $3.1 bln at the end of 2014 and from $1.9 bln in 1Q14. Although these issues are causes for concern, they are already reflected in the company's share price, with the stock rising only about 2 percent year-to-date, significantly below the stock performance of its main competitors. While shares of Newmont Mining Corp NEM have surged about 40 percent, Barrick Gold Corporation ABX has seen its share rise 21 percent year-to-date. The analysts commented, "…we think there is limited downside remaining in GG relative to its peers with potential catalysts coming through 2015 by way of sequentially improving operations, while adding that although the risk of missing production guidance is "heightened" given the weak Q1 results and the balance sheet expansion, "GG continues to have better y-o-y growth metrics than its peers even at the low end of guidance (16% versus -1% for NEM and 0% for ABX) and a better rated balance sheet."
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Posted In: Analyst ColorReiterationAnalyst RatingsBarclays
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