Barrick Gold Missed Estimates; Goldman Reiterates Conviction Buy Rating On Shares

Barrick reported second-quarter EPS/revenue of $0.14/$2.01 billion versus consensus estimate of $0.15/$2.07 billion.

But, the brokerage is impressed with the ASIC, signaling the cost cutting cycle is not over for the company." The top-end of the updated outlook for AISC of $750–790/oz remains below annual guidance for the rest of Goldman's covered issues, thereby giving Barrick "the ability to realize industry-high cash margins."

"In our view, ABX is now well positioned to harvest FCF over the next few years, generating a yield of above 4 percent consistently on spot prices. In our view, ABX has done a good job of repairing its balance sheet over the past 24 months; we forecast net debt/EBITDA to be under 2.0x by the end of 2016," analyst Andrew Quail wrote in a note.

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Quail noted that financial flexibility should not be an issue for Barrick, as more than half of the company's debt due comes in post-2030.

"Going forward, we also see positive catalysts like divesting further assets (process to sell KCGM stake initiated; we value KCGM at c.$830 million in our model) to delever and improving the company's financial flexibility to explore some of its organic growth options," Quail added.

However, the analyst made minor adjustments to his model that resulted in lowering 2016 EPS view by $0.03 to $0.62.

Shares of Barrick Gold closed Thursday's regular trading at $21.27 and were up 1.55 percent at $21.61 at time of writing Friday morning.

Full ratings data available on Benzinga Pro.