The rating increase follows Barrick Gold's announcement that it intends to sell assets potentially totaling $500 to $700 million, which it could use to repay debt.
The company should be able to repay all debt maturities to 2020, thereby reducing short-term financial risk and removing overhang from the stock, Barclays said in an analyst note.
This decreased risk paired with the company's decline in stock price make it "compelling," the firm noted.
On Wednesday, Barrick Gold announced a streaming deal with a unit of Royal Gold (RGLD) - Get Royal Gold, Inc. Report that will get the company to 90% of its debt reduction goal for this year, according to The Wall Street Journal.
Also on Wednesday, the company reported 2015 second quarter earnings of 5 cents per diluted share on revenue of $2.23 billion.
Barrick Gold is a gold mining company based in Toronto.
Separately, 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 a number of negative factors, 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 generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market, BARRICK GOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- ABX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 63.73%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 16.2%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- BARRICK GOLD CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BARRICK GOLD CORP continued to lose money by earning -$2.49 versus -$9.63 in the prior year. This year, the market expects an improvement in earnings ($0.41 versus -$2.49).
- You can view the full analysis from the report here: ABX Ratings Report