Here's A Gold Rally Sympathy Play With 32% Upside Potential: Analyst

Zinger Key Points
  • Analyst is bullish on Barrick Gold as long as shares stay above $16, with a price target of $24-$26 on the stock.
  • Barrick Gold has cleaned up its balance sheet in recent years, paying down debt and boosting cash flow, the analyst said.

Gold prices have been on a rollercoaster ride since last week, with investors selling off their gold holdings in the wake of the abating fears over the U.S. banking crisis.

Prices of the precious metal soared past the $2,000 level earlier this week, but fell 1.92% to $1,944 on Tuesday.

Despite market turbulence, analyst Gianni Di Poce believes that there is still upside potential for gold-exposed stocks, particularly Barrick Gold Corp GOLD.

Check out Benzinga's precious metals page.

The GOLD Analyst: Di Poce, in his weekly “Benzinga Pro Insider Report,” said he is bullish on Barrick Gold as long as shares stay above the $16 level, and set a price target of between $24 and $26 on the stock.

Di Poce noted that Barrick brought in $11.01 billion in revenue in 2022, along with $432 million in earnings. While the valuation metrics for the company are mixed, with a high P/E of 72.50 but a more moderate Price-to-Sales of 2.79 and an EV to EBITDA of 7.77, the technical analysis for the stock is bullish.

Barrick recently broke out from a falling wedge formation and is now retesting former-resistance-turned-support, Di Poce said, creating a higher-low and implying higher prices ahead.

Barrick is focused on operating Tier One mining assets, with the ability to produce over 500,000 ounces of gold per year. If gold prices rally, it could translate to a significant increase in forward revenue.

The company also has at least 10 years of productive life remaining in its current mines. That's a crucial factor to consider when looking at mining companies since they extract a finite natural resource.

Barrick is expected to produce roughly 6.5 million ounces of gold and copper alloy equivalents into 2032. It has also significantly cleaned up its balance sheet in recent years by paying down debt and boosting its cash flow, the analyst noted.

Free quarterly cash flow is now $1.24 billion, and the company is keen on returning capital to its shareholders with a payout ratio of around 229%. While the gold market may be turbulent at present, Di Poce’s analysis suggests that Barrick could be a solid investment choice for those seeking exposure to the precious metal.

Next: Thanks Crypto Rally - Marathon Digital May Run 47% Now, Says Gianni Di Poce 

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