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Barrick Gold the face of corporate evil? Nonsense. Its founder does Canada proud (Fred Lum)
Barrick Gold the face of corporate evil? Nonsense. Its founder does Canada proud (Fred Lum)

Eye on Equities

Barrick downgraded as stock loses lustre with gold bugs Add to ...

Barrick Gold Corp. has seen some decent gains this summer as the bullion price catapulted to fresh records. But the stock is still well off its 52-week high of $55.74 (U.S.) reached in late April just before the blockbuster $7.4-billion all-cash bid for Equinox Minerals Ltd., which thrust the traditional gold miner into the world of red metal.

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CIBC World Markets Inc. analyst Barry Cooper sees further gains in the stock over the next year, but is advising investors to remain cautious as the miner diversifies its cash flow with copper. He downgraded Barrick to “sector performer” from “sector outperformer” while slashing his price target by $8 to $63 (U.S.). (CIBC had been restricted from covering the stock for the past four months.)

While Barrick may appeal to value investors, he doesn’t think the stock will find a lot of favour with gold bugs. “We believe that gold stocks need broad appeal in order to outperform. With a growth profile in bullion that is a few years off, we think that ABX will not garner enough investor interest to have it as an overweight position,” Mr. Cooper said in a research note today.

Barrick has been heavily criticized for making the Equinox acquisition, with many investors contending it paid too much. They also fret that adding copper resources will dilute the premium that will be paid for gold miners such as Barrick, especially as copper prices have come well off the boil.

Mr. Cooper concluded that “the company is moving to enhance its prospects as a company, but not necessarily a gold company. Such a plan is likely to be the way of the future for all large gold producers.”

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Standard & Poor's today cut its rating on Google to "sell" from "buy", citing concerns about its plan to buy Motorola Mobility for $12.5-billion (U.S.).

“After further consideration of GOOG’s plans announced yesterday to purchase Motorola Mobility, we see greater risk to the company and stock,” Forbes quoted analyst Scott Kessler as saying in a research note. “We expect the transaction to be consummated next year, but later than early 2012, which GOOG indicated. Moreover, despite MMI’s extensive and valuable patent portfolio, we are not sure it will protect Android from IP issues. We also believe the purchase of MMI would negatively impact GOOG’s growth, margins and balance sheet.”

Downside: Mr. Kessler slashed his price target by $200 to $500 (U.S.)

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While Whistler Blackcomb Holdings Inc. enjoyed a 14 per cent rise in skier visits in its latest quarter, much of this is being driven by local visitors, not people coming from afar, noted CIBC World Markets Inc. analyst Alex Avery. The strong Canadian dollar and good snow conditions elsewhere in North America have reduced travel to Whistler and Mr. Avery thinks this trend may continue.

Downside: Mr. Avery cut his price target by $1.25 to $11 and continues to rate the stock as a “sector performer.”

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Analysts are slashing their price targets on GLG Life Tech Corp. after the developer of the stevia sweetener reported a disappointing second quarter. The company’s profitability has been hurt by weaker pricing and higher promotional costs in its business lines. Desjardins Securities Inc. analyst Pooya Hermami doesn’t see much upside in the stock until there’s sustainable improvement in its earnings power.

Downside: Desjardins cut its price target by $2.40 to $6.20 and Canaccord Genuity slashed its by $4.50 to $7.50.

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Exchange Income Corp. , an acquisition-oriented transportation and industrial manufacturing company, delivered “excellent” second-quarter results, with both sales and margins exceeding expectations, commented Canaccord Genuity analyst Chris Bowes. “We believe the outperformance is sustainable and below the firm’s potential,” he said.

Upside: Mr. Bowes trimmed his price target by 50 cents to $23.75 due to more shares outstanding but maintained a “buy” rating. Stonecap Securities analyst C. Scott Rattee cut his price target by $1 to $27, citing “increasing macro headwinds” in its specialty manufacturing division.

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Occupancy rates have stabilized at multi-family residential property owner Boardwalk REIT , and renter incentives are declining, noted RBC Dominion Securities Inc. analyst Neil Downey. With long-term interest rate yields on the decline, the trust may be able to realize substantial interest rate savings starting next year when debt is refinanced.

Upside: Mr. Downey raised his price target by $3 to $53 while maintaining a “sector perform-average risk” rating.

 
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