Barrick Gold stock forecast: Can it recoup losses in 2022?
Barrick Gold Corporation is Canada-based gold and copper producer. After US-based Newmont, Barrick is the world's second-largest gold producer in terms of annual production volume and market capitalisation.
The company has operations and projects in North and South America, Africa, Papua New Guinea and Saudi Arabia. Last year, the Toronto-headquartered miner produced 4.43m ounces of gold, about 1.6m lower than Newmont's planned 6m ounces.
Gold stock is often linked to the gold price. However, as we have seen throughout 2021, this is not exactly the case for Barrick Gold.
Barrick Gold stock historical prices showed that the company's share price fell by 22% in 2021, while gold prices only dipped by 4%, according to data from the World Gold Council. In comparison, Newmont's stock gained 1.78% throughout 2021.
The miner reported strong results in the final quarter of 2021.
Gold prices have been up so far this year as investors dumped risky assets in light of volatile stock markets.
In this article, we will look into the company's financial and stock performance, and the latest Barrick Gold stock projection.
Barrick Gold stock analysis: Major price drivers
Barrick Gold's shares are traded on the Toronto Stock Exchange (TVX) under the symbol ABX and on the New York Stock Exchange (NYSE) under the ticker symbol GOLD.
2020 was a bullish year for gold miners. Uncertainties on markets and global economic growth brought by the coronavirus pandemic drove investors to find safer assets such as safe-haven gold and gold miners' stocks. Gold prices surged about 25% in 2020, hitting an all-time high of $2,063/ounce on 6 August 2020.
Barrick Gold stock value jumped by 22.56% in 2020, briefly hitting $30 in September that year.
Barrick Gold started 2021 at the $24 level. Gold prices stabilised throughout that year and only dropped about 4% to $1,805/ounce. But, the company's shares fell 22% on the NYSE, ending the year at $19.
Alerian, an independent index provider based in Texas, said while it’s true that gold prices influence gold miner revenues, other factors can lead earnings and stock prices to move unexpectedly.
One factor is "All-in Sustaining Costs" (AISC), or all costs related to gold mining operations, like labour and operational cost. According to Alerian, AISC had risen since the fourth quarter of 2021 and hit the highest level since 2013 due to inflationary costs. Covid-19 pandemic restrictions had caused labour and freight shortages for most of 2021, hampering the companies' operations.
Barrick Gold reported its ASCI rising by 6% to $1,026/ounce in 2021, from $967/ounce in 2020.
The company started 2022 at $18.54 a share, a drop of 2.42% from close on 31 December 2021. So far this year, Barrick Gold stock market price has gained 19.79%, as of 22 February closing. The most recent one-year period showed Barrick Gold had risen 12.90%.
Barrick Gold stock fundamental analysis: Earnings beat estimates
On 16 February, the miner reported fourth-quarter earnings that beat analysts' estimates for eight consecutive quarters since the second quarter in 2020, according to data compiled by MarketBeat.
The company recorded net earnings of $726m in the fourth quarter last year, compared to $685m in the same period a year earlier. It booked adjusted earnings of $0.35 a share, exceeding the analysts’ consensus of $0.30.
Barrick Gold posted revenue of $3.31bn in the fourth quarter, beating the MarketBeat consensus of $3.20bn, and up from $3.27bn in the fourth quarter of 2021.
The company earned $1.41 a share for 2021, rising from $1.31 a share in 2020. However, net sales dropped by 5% to $11,985m in 2021, compared to $12,595m a year earlier, partly because of lower gold price in Q4 2021. Its realised gold price averaged $1,793/ounce in the fourth quarter of 2021, compared to $1,872/ounce in the same period in 2020.
Higher realised copper prices compensated for the drop in gold prices. Barrick Gold's average realised copper price rose to $4.63/pound in the fourth quarter of 2021, from $3.39/pound in the same period in 2020. For the full year 2021, the company's average realised copper price surged 48% to $4.32/pound, from $2.92/pound in 2020.
At the end of the year, the company had net cash of $130m after a record cash distribution of $1.4bn to shareholders.
On top of that, the company increased its dividend for the fourth quarter by 11% to $0.10 a share from the previous dividend of $0.09. The next dividend will be paid on 15 March 2022. Typically, Barrick Gold pays dividends four times a year, excluding specials.
On the production side, Barrick Gold mined 4.43m ounces of gold in 2021, dropping by 7% from 4.76m ounces in 2020. Likewise, its copper output fell 9% to 415m pounds, from 457m pounds a year earlier.
As of 31 December 2021, Barrick's proven and probable gold reserves were 69m ounces at an average grade of 1.71g/t, compared to 68m ounces at an average grade of 1.66g/t in 2020.
Barrick Gold stock news: 2022 guidance and share buyback
In 2022, the company expects to produce 4.2m to 4.6m ounces on the back of stable performance on its portfolio of six mines classified as "Tier One Gold Assets”. Barrick defines a Tier One mine as an asset producing more than 500,000 ounces of gold per annum and having a mine life of at least ten years.
Gold production guidance excludes Porgera in Papua New Guinea, which has been placed into temporary care and maintenance since 25 April 2020 following a dispute with the PNG government over the decision not to extend the mine's special mining lease (SML).
Barrick Gold expects to mine 420m to 470m pounds of copper in 2022, up from 415m pounds in 2021. It expects copper output in the second half of 2022 to be stronger than the first half due to a steady increase of throughput at the Lumwana copper mine in Zambia.
The company plans to spend between $1,900m to $2,200m capital expenditure in 2022 attributable to gold and copper, compared to the actual capital expenditure of $1,951m spent in 2021.
Barrick Gold also announced it would start a share buyback program for up to $1bn of its outstanding common shares over the next 12 months.
Barrick Gold stock price prediction: Analyst sentiment and price target
Mikhail Karkhalev, analyst at Capital.com, said that Barrick Gold shares are on the rise and there are plenty of reasons for that:
“First, geopolitical tensions in the Middle East and around Ukraine are forcing investors out of equity markets and increasingly turning their attention to gold and other protective instruments.
“Secondly, high inflation in the US also contributes to capital inflows into gold as a traditional tool of protection against the depreciation of money.
“Thirdly, Barrick Gold announced that it is expanding its copper mining business, focusing on African countries. According to the company's CEO, copper is now a strategically important metal that is crucial for electrification of transportation and green energy sectors and contributes around 20% to Barrick Gold's profits.
“Finally, Barrick Gold reported a positive Q4 2021: revenue was up 15.1% to $3.26bn, net income was $723.56m, up 110% on Q3 2021, and EBITDA was $1.79bn, up 18.5% quarter-on-quarter.
As of 23 February, six out of 10 analysts surveyed by MarketBeat recommended a 'buy' for Barrick stock, two rated it a 'hold' one a 'sell' and one a 'strong buy’.
The analysts offered a 12-month average Barrick Gold stock price target at $33.41, a potential 46.81% increase from its last closing price of $22.76 (as of 22 February). The lowest estimate was set at $19, while the highest one was $72.72.
A consensus of 23 investment analysts polled by CNN Money also rated the stock a 'buy', with a 12-month average target at $24.71, or 8.6% higher than the current price. The highest price forecast offered by analysts was $32.33 and the lowest $22.
TipRank's consensus of seven Wall Street analysts recommended a 'moderate buy’ on Barrick's stock. Their conservative 12-month Barrick Gold stock price target was $23.41, representing a 2.86% change from the current price. The analysts provided the highest target of $26.70 and the lowest price target of $20 (as of 23 February).
For the gold price outlook, analysts expected the yellow metal might average lower in 2022. On its 17 February note, Fitch Solutions expects gold prices to average $1,700/ounce in 2022, compared to $1,798/ounce in 2021 as the US dollar strengthens and bond yields continue to recover.
Barrick Gold stock forecast: Targets for 2022, 2025 and 2027
Algorithm-based forecasting services also provided mixed price targets for Barrick stock, as of 23 February.
Gov Capital predicted the share price to rise by 46.571% within a year to hit $33.38 on 23 February 2023. Its Barrick Gold stock forecast for 2025 suggested the price could increase to $57.78 by the end of the year and reach $80.06 in February 2027.
Wallet Investor shared a more conservative view. It estimated the stock to trade at $23.65 at the end of 2022 and $31.49 by the end of 2025. Although the service did not provide targets for 2030, its five-year Barrick Gold share price forecast expected the price to hit $36.04 in February 2027.
When looking for Barrick Gold stock value predictions, it is important to bear in mind that analysts' forecasts can be wrong. Predictions are based on fundamental and technical studies of Barrick Gold’s historical price pattern. Please note that past performance does not guarantee future results.
Do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest funds that you cannot afford to lose.
FAQs
Is Barrick Gold a good stock to buy?
The consensus analyst rating for Barrick Gold was bullish, as of 23 February, according to the data by MarketBeat, CNN Money and Tip Ranks. Whether it’s a suitable investment for you will depend on your personal research and trading strategy. You need to perform your own due diligence and decide if the stock meets your needs and appetite for risk.
Why has the Barrick Gold stock price been going up?
The company reported stronger than expected fourth-quarter earnings amid recovering gold prices, which contributed to the stock’s year-to-date growth (as of 23 February).
Will Barrick Gold stock go up or down?
This depends on a number of factors, including how far ahead you’re looking. Remember, analysts can be wrong. It’s important to carry out your own research before making any trading decision. And never invest money you cannot afford to lose.
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