Citigroup Says Buy Barrick Gold, but Sell Agnico-Eagle Mines

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August 2, 2016 8:43am NYSE:ABX NYSE:AEM

gold miner pickAnalysts at Citigroup on Tuesday published some strongly differing opinions on a pair of large-cap gold miners — and the ramifications could be big for gold mining ETFs.


Barrick is a Buy
The firm initiated coverage on Barrick Gold Corporation (USA) (NYSE:ABX) with a “Buy” rating and $29 price target. That target represents a 30.45% upside over the stock’s previous closing price of $22.23.

ABX shares rose $0.23 (+1.03%) to $22.46 in premarket trading Tuesday. Barrick shares have surged 200% since the start of the year, versus just a 6.4% gain in the S&P 500.

ABX-2016-08-02

Agnico-Eagle Mines is a Sell
Meanwhile, the firm started coverage on Agnico-Eagle Mines Ltd (USA) (NYSE:AEM) with a “Sell” rating and $44 price target. That target suggests a big 25% downside to AEM’s Monday closing price.

AEM shares were unchanged at $58.89 in premarket trading Tuesday. Agnico-Eagle stock has gained 124% year-to-date.

AEM-2016-08-02

Gold Miners ETF in Focus
Citigroup’s strong opinions on ABX and AEM will likely have an impact on the red-hot Market Vectors Gold Miners ETF (NYSE:GDX), which counts those two stocks among its major holdings:

gdx-holdings-aem-abx
Data: VanEck

As you can see in the table above, ABX is the largest holding within GDX, representing a massive 10.43% of the fund’s net assets. AEM is the sixth largest holding of GDX, with 5.2% of its net assets.

The GDX rose $0.42 (+1.36%) to $31.35 per share in premarket trading Tuesday, hitting fresh three-year highs. GDX has gained more than 125% year-to-date.

GDX-2016-08-02


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