4 ASX-listed gold miners to watch as spot prices make a comeback
Morgan Stanley's insights into four gold miners as spot prices begin to show signs of life.
Source: iStock
Mentioned
KEY POINTS
- A positive US inflation surprise, weaker bond yields and a falling US dollar has brought life back to struggling gold prices
- Gold has bounced off September lows of US$1,620 to a recent high of US$1,785
- Morgan Stanley is buy-rated on two large cap gold names
Gold has started to show some signs of life after a downward spiral from March highs of US$2,070 an ounce to November lows of US$1,615.
Top-heavy price action for bond yields and the US dollar as well as the cooler-than-expected US inflation report earlier this month has seen the yellow metal rally almost 10%.
Morgan Stanley says there are signs of a potential downshift in the Fed's tightening path, which could provide support for gold.
Gold versus real yields (Source: Morgan Stanley Research)
Gold miner preferences: Morgan Stanley
Overweight (Buy)
Evolution Mining (ASX: EVN) was recently upgraded to overweight with a $3.10 target price.
"We think that the underperformance at Red Lake could be now in the past and the company guidance around Red Lake could be conservative, leaving potential for upgrade and production beats," the analysts said.
Newcrest Mining (ASX: NCM) is overweight rated with a $23.00 target price, given its 'significant growth asset portfolio'.
The investment bank notes that the company "owns the two high value, long life mines Cadia and Lihir. As well as stakes in the long life development projects Wafi-Golpu, Fruta del Norte and Red Chris."
Equalweight (Neutral)
Northern Star (ASX: NST) has been moved to equalweight with a $10.80 target price.
"Most of Northern Star's catalysts are now in the past. The stock is trading more in-line with historical base case and spot multiples," said Morgan Stanley.
"It is showing less price to net present value upside and is implying a relatively higher gold price versus peers."
Underweight (Sell)
Regis Resources (RRL) was underweight rated with a $1.70 target price. The analysts were cautious about the company's Duketon North Project and expect to see a 5% downside to production relative to FY24 consensus expectations.
"We view the Tropicana acquisition as expensive. Regis Resources has disappointed over 2021 and downgraded its FY22 production guidance while raising all-in sustaining cost guidance in 2Q22."
Year-to-date gold stock comparisons: Evolution (blue), Newcrest (red), Northern Star (green) and Regis (yellow)
