Gold miners should outperform the bullion price this year, according to analysts at Liberum spurred by an outbreak of mergers and acquisitions across the sector.
Liberum has upgraded both Endeavour Mining and Centamin to 'buy', from 'sell' and 'hold' respectively, though its favourite remains UK-listed house stock Caledonia.
“We continue to favour Caledonia, whose shares we believe are oversold.
“Continued delivery on the turnaround at the Blanket mine should help restore confidence in the company.
“This, positive results from underground exploration drilling and the highly prospective Bilboes-Motapa project could see Caledonia end up becoming a bid target if the share price remains at current levels.”
Across the sector, Liberum sees gold remaining in favour due to elevated global war and trade tensions in the wake of a Trump re-election, with associated inflation risk.
In addition, “We expect that the gold space will remain a hotbed of M&A activity this year.
“Just this week, Perseus announced its intention to make an all-cash offer for OreCorp, competing with a prior cash+shares one from SilverCorp.
“We see Barrick as Endeavour’s most likely suitor, but think it likelier that Endeavour will resume attempts at acquisition later in 2024.
“Centamin arguably has the more pressing need to engage in M&A.”
Shares in Caledonia rose 3% to 887.5p.