Barrick Gold Corp (USA) (NYSE:ABX) — Barrick Gold Corp is one of the world’s largest gold companies in terms of both production and in-the-ground reserves. Standard & Poor’s Capital IQ maintains a “five-star strong buy” rating on the stock with a price target of $24.
Even though S&P decreased their 2017 earnings per share estimate by 30 cents to 75 cents, they still consider Barrick as a premier gold miner. Gold production in Q4 was 1.52 million ounces at an estimated “all-in” sustaining cost (AISC) of $732 per ounce. Management forecasts that 2017 production of 5.6 million-5.9 million ounces at an AISC of $720-$770 per ounce will result in a debt reduction of $1.5 billion.
Management’s goal is to reduce total debt by an additional $2.9 billion to $5 billion by 2018, and they have positioned the company to have a positive cash flow at $1,000 per ounce. This should result in strong free cash flow at current prices.
This has been an excellent year for stockholders of ABX stock. It bottomed in December at under $14, formed a bullish “V” formation, and jumped to over $21 for a gain of 50%. However, the false break through the resistance line at $19 resulted in a minor reversal, driving the stock to below its 200-day moving average at $18-plus.
However, the decline appears to be over. A new buy signal from a Golden Cross coupled with a buy from the MACD, both long-term, should provide confidence to buyers seeking a hedge against the uncertainties of other markets. Thus, buy ABX at $19.50 with a trading target of $24 for a proposed gain of over 20%.
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