This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why Barrick Gold Corp (ABX) Lost Over 10% This Week

Stocks in this article: ABX

NEW YORK (TheStreet) -- Barrick Gold Corp (ABX) tumbled 11% this week following a mix of news that heightened concern about the company's current operations. On Friday alone, the stock plunged 7.6% to $17.92.

The gold and copper producer announced plans of a bought-deal offering of 163.5 million shares at $18.35 each on Thursday. Of the $3 billion in capital expected to be raised, the company will use around $2.6 billion to strengthen its balance sheet and pay down outstanding debt.

The Canadian industrial also reported third-quarter earnings of 58 cents a share on $2.99 billion in revenue. The results beat analysts' expectations of 51 cents a share on $2.97 billion, according to those surveyed by Thomson Reuters.

In conjunction with its earnings report, the company announced it would suspend operations at Pascua-Lama, a mining project on the border of Chile and Argentina which has already incurred costs of around $9 billion according to Reuters.

"We have made this decision in light of prolonged lower gold and silver prices and uncertainty related to timing required to obtain permits as well as other uncertainties and risks associated with other legal and regulatory matters," said CEO Jamie Sokalsky during a conference call.

The company expects its 2014 capital cost guidance to be further reduced by $1 billion as a result. The miner is aiming for an additional $500 million in annual cost savings related to job cuts and an organizational restructure.

JPMorgan reiterated its "neutral" rating but updated its price target to $19 from $18, citing the mine's suspension as likely to fortify near-term cash flow.

Deutsche Bank kept its "buy" rating but downgraded its price target to $28 from $30. Analyst Jorge Beristain said the share offering and mine suspension will "radically improve Barrick's balance sheet, which had become the major overhang to its outlook".

Others in the industry have moved in sympathy. In Friday trading, fellow gold miners Newmont Mining (NEM), Goldcorp (GG) and Kinross Gold (KGC) have lost 4.7%, 4.5% and 5.4% respectively.

TheStreet Ratings team rates Barrick Gold Corp as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate Barrick Gold Corp (ABX) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself."

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,719.00 +33.27 0.19%
S&P 500 2,052.75 +4.03 0.20%
NASDAQ 4,701.8670 +26.1550 0.56%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs