Can gold miners Newmont and Barrick shine in 2024 after muted performance in 2023?

Gold prices have gained about 12% this year supported by continued safe-haven demand fuelled by Middle East tensions, however, the strength is not reflected in the share performance of the top two gold producers, Newmont (NYSE:NEM) and Barrick Gold (NYSE:GOLD).

2023 Stock Performance

Newmont investors endured a momentary selloff in early November, with shares down 1.2% YTD, coinciding with its recent acquisition of Newcrest Mining. While it strengthened Newmont’s position as the world’s leading diversified gold miner, investors were likely concerned with higher execution risks. In case of Barrick, which is up 1.5% in the same period, the stock initially gained amid the Middle East conflict but has since lost momentum. Dip buyers likely used the surge to take profit astutely. Barrick has also cut its production outlook due to near-term challenges but expects to ramp up production in 2024.

Over a five-year timeframe, NEM has advanced 33%, while Barrick has climbed 42%.

Looking Ahead To 2024

However, keeping aside the challenges, the overall situation could change in terms of prices, with bullion already having seen a Santa Clause rally, advancing to an all-time high this month after Federal Reserve Chair Jerome Powell increased traders’ confidence the U.S. central bank was nearly done with its monetary policy tightening.

Among BofA’s Buy-rated North American gold stocks, the Bank likes senior gold producer NEM for “peer-leading free cash flow generation and yield via a portfolio of un-matched world-class gold and copper assets.” BofA sees the opportunity for significant value creation as NEM streamlines the portfolio to one more focused on the Tier 1 assets. Forecasts NEM to generate $3.7 billion and $4.5 billion of free cash flow in 2024E and 2025E (up by $835mn and $1.0 billion prior), and 2024E dividend yield of 4%.

Latest Earnings

Newmont (NEM) missed Q3 adjusted earnings expectations and cut its full-year production guidance, while Barrick Gold (GOLD) topped Q3 earnings estimates on higher production, lower costs.

Earnings Prediction and Recommendations

Turning to the Wall Street community, analysts have a consensus EPS estimate of $1.61 on revenue of $11.41B for the fiscal period ending Dec 2023. 7 analysts give NEM a Strong Buy, while 6 have Buy on the stock. About 7 analysts have given it a Hold recommendation and 2 rated it Sell.

The consensus estimate for Barrick on the other hand is to earn an EPS of $0.83 and revenue of $11.33B for the same period. 9 analysts give GOLD a Strong Buy, while 8 are Hold on the stock. About six analysts have given it a Hold recommendation and one rated it Sell.

Jefferies, which has a Hold rating on Barrick Gold says, shares could outperform other major North American gold miners. In the upside scenario, brokerage says, Barrick uses free cash flow in a strong gold price environment and proceeds from asset sales to ramp up capital returns.

What Quantitative Measures Say