Production at Barrick Gold Corp. is likely to be flat for next year and costs are rising amid inflationary pressures in the industry.
But CIBC World Markets Inc. analyst Barry Cooper still sees lots of upside for value investors. When calculated using the current spot gold price of $1,750 an ounce, Barrick is trading at less than 10 times earnings for both 2011 and 2012, he notes. "We think that at these levels, value investors will either step into the stock or there are no value investors left in the market," he contends in a research note today.
Growth at the company will likely have to wait until 2013, but valuation multiples should start to rise next year and justify a higher trading price than current levels, he argues. Furthermore, he believes the project pipeline for the company is better than industry rival Newmont Mining Corp.
He's also encouraged by Barrick's new discovery at Cortez Hills in Nevada, but concedes investors may take a while before paying up for the project. "With likely a time horizon to production that takes the project out to the end of the decade, it may be a while before the market pays up for this find. We think there are more than 10 million ounces there," he said.
Upside: Mr. Cooper reiterated his "sector performer" rating while trimming his price target by $1 (U.S.) to $71.
Canaccord Genuity analyst Bobby Burleson downgraded Nvidia Corp. to "hold" from "buy," citing a number of concerns that include possible supply chain disruptions to PC components due to the Thailand floods. Recent checks with component suppliers also suggest that Nvidia, a global leader in programmable graphics processor technologies, could face waning demand from smart phone customers toward year end, he said.
Downside: Mr. Burleson cut his price target by $3 to $15.
Leap Wireless International delivered a "superlative" third quarter thanks to many steps it has taken to strengthen its business, including an improved portfolio of devices, successful promotions and a focus on customer retention and cost controls, said Brigantine Advisors analyst Bruce Roberts. "We expect that this quarter is the start of better quarters to come, and we expect a strong fourth quarter, given the positive results we received through our channel checks," he commented.
Upside: Mr. Roberts reiterated his "buy" rating and raised his price target by $2 to $11.
While applauding the company's low-risk profile, attractive dividend yield and "meaningful growth," Canaccord Genuity analyst Aravinda Galappatthige downgraded Cineplex Inc. because of recent share price appreciation. Box-office receipts in October hit a soft patch, but the analyst believes Cineplex is set to post mild growth in sales in the fourth quarter thanks to a slate of movies that should perform well during the holiday period.
Downside: Canaccord lowered its rating to "hold" from "buy" while reducing its price target by 75 cents to $27.25.
AbitibiBowater Inc. third-quarter results were ahead of Street expectations and demonstrate the company's ability to improve results following its emergence from restructuring, said Canaccord Genuity analyst Neal Gilmer. But despite continuing to recommend AbitibiBowater thanks to its improving balance sheet and attractively priced shares, he sees less upside for the stock given lower forecast prices for certain wood products.
Downside: Mr. Gilmer trimmed his price target by $2 (U.S.) to $25.