Citi Analysts Initiate Barrick Gold At Buy: Lowest Cost, Highest Return

Citi's Alexander Hacking initiated Barrick Gold Corporation (USA) ABX at Buy with a $29 price target. He applauded Chairman John Thornton's "aggressive" turnaround program. "Debt remains relatively high but manageable… [and] further de-leveraging will be accretive to equity value" stated Thornton.

Lowest Cost, Highest Returns

Additionally, the analyst highlighted Barrick's lowest cost portfolio in the sector while generating the highest returns in terms of ROIC and ROE. Barrick's strong profile allows the company to remain free cash flow positive at any gold price above $1,000/oz according to Hacking.

Related Link: Newmont Mining Attractively Valued In Citi's View

Citi's Concerns

"Barrick's gold production is expected to continue to decline, especially post-2025 – and the company may decide to embark on another capex cycle," said Hacking. The analyst also noted executive management's "very high" turnover which may be a disruptive factor.

At time of writing, Barrick Gold traded at $22.80, up 2.5 percent.