A traffic sign is seen near Barrick Gold Corp.'s Veladero gold mine, on the Argentine side of the border district between Chileês Huasco province and Argentinaês San Juan province, a few kilometers from the site for the Pascua Lama gold project, northeast of Santiago, Chile.STRINGER/CHILE
At a time when bullion prices are trading near all-time highs, Barrick Gold Corp. is shedding more light into how it will grow its production. Analyst Greg Barnes at TD Newcrest is encouraged by what he sees.
In recent presentations, Barrick outlined a new five-year production growth target of nine million ounces, a rise of 13 per cent from estimated 2010 levels. Mr. Barnes had been modeling relatively flat output averaging about 7.7 million ounces over the next half decade.
After reviewing Barrick's latest growth prospects, he raised his production forecast to 8.6 million ounces by 2015. Factoring into his outlook are Barrick's plans to eliminate its hedge book, sell non-core assets and proceed with several large projects, including Pascua Lama, which straddles the border of Argentina and Chile, and Pueblo Viejo, in the Dominican Republic.
Looking further out, though, TD Newcrest did have some concerns. "From our viewpoint, the shift towards better defining its growth trajectory is encouraging; however we believe that organic growth is unlikely to be sufficient for Barrick to sustain 8.5 to 9.0 million ounces of annual production much beyond 2015," Mr. Barnes said in a note. "We continue to believe that the company may look to supplement its longer-term development pipeline over the next 12-18 months."
Upside: Mr. Barnes hiked his 12-month price target by $2 to $61.00 (U.S.) and continues to rate the stock as a buy.
Home improvement retailer Rona Inc. is likely to face challenges arising from a softer housing market and "fickle" consumer confidence, said TD Newcrest analyst Jessy Hayem.
Management had indicated a stronger start to the third quarter, but Mr. Hayem said this has probably decelerated given a slew of negative housing related stats and a rush of sales that had taken place in advance of the HST in Ontario and British Columbia.
Downside: Mr. Hayem cut his 12-month target price by $1 to $17 and continues to rate the stock as a buy.
Richmont Mines Inc. is "set to hit the radar screen" given its established operations, production growth that will begin in mid-2011, and a slew of "interesting exploration projects," said Tara Hassan, analyst with National Bank Financial. Ms. Hassan recently returned from a site visit to Richmont's Beaufor mine in Quebec and the Island mine in Ontario.
Upside: National Bank Financial does not provide a target price for the stock but expects increased valuation if planned cost reductions and operational improvements are achieved.
Western Coal Corp. is on track to meet its ambitious near-term growth targets, RBC Capital Markets analyst Robin Kozar said following a tour of the company's Canadian operations. The company is targeting 6.1 million tonnes of coal production in fiscal year 2011 and Mr. Kozar expects strong fiscal third-quarter results and sees promising exploration potential.
Upside: Mr. Kozar hiked his price target 50 cents to $8.00.
CVS Caremark Corp. is beginning to realize benefits from the initiatives it put in place after the merger of CVS Corp. and Caremark Rx Inc., and there is significant opportunity in the pipeline as it "moves from defense to offense," said Citi analyst Deborah Weinswig.
Upside: Ms. Weinswig hiked her price target by $2 to $42 and reiterated her buy rating.
Darcy Keith