JPMorgan Analysts Are Bullish on Gold. They’re Mixed on Australian Gold Miners.

JPMorgan is bullish on the value of gold that has been removed from the ground. It’s perhaps less so on the bullion below it.

The investment bank’s mining analysts on Wednesday lifted their estimates on the outlook for gold and have increased the near-term gold price forecast from $1,850 an ounce to $2,000. The analysts kept their long-term gold price view at $1,600/ounce.

The analysts, however, on average only marked up their target price on Australian gold miners by 5%. They upgraded IGO and St. Barbara to overweight, and downgraded Saracen Mineral Holdings to neutral. They kept Newcrest Mining at neutral and Evolution Mining at underweight.

While production reports were in line with expectations, guidance for the fiscal 2021 has disappointed, both on production and capital expenditure. Not all the miners are equally sensitive to rising gold prices, they add.

“It’s no surprise that the names we like are the ones most leveraged to higher prices based on our modeled assumptions, but there is also a strong element of turnaround and catch-up of underperformance. Absolute valuations have been less relevant in our recent conversations with clients, but we continue to stay true to 1x-net-present-value-based price targets across the sector,” the analysts said.

Barron’s – By Steve Goldstein – Aug. 5, 2020 9:11 am ET


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