The recent capital markets day has prompted two heavyweight brokers to weigh in with ultra-bullish price targets for gold miner Randgold Resources PLC (LON:RRS).
The lower of the two valuations projects the stock rising 40%, while the more optimistic assessment of prospects suggests there’s 65% ‘upside’ from current levels.
In a note to clients JP Morgan Cazenove said it expects Randgold to be producing 1.3mln ounces of gold by 2020.
But even at current output it is turning into something of a cash machine.
Assuming the price of the yellow metal stays at US$1,200 an ounce, then Randgold will generate cash of £650mln next year after dividend payments.
This, the broker reckons, is more than enough to support an “enhanced payout” to investors.
It rates the stock ‘overweight’ with an £83 a share price target.
UBS, meanwhile, reckons Randgold is worth £97.50.
It said in a note to clients: “[The] low-cost position and strong balance sheet will allow them to simultaneously invest in value accretive growth projects and materially lift dividend payments medium-term (even at flat to lower gold prices).
“Near-term macro/gold price volatility is likely to dominate price action for gold equities; but medium-term we continue to believe Rangold is well positioned versus its gold peers.”
At 8.30am, the shares were up almost 3% at £59.46.
Of the 13 analysts logged as following Randgold, eight are logged as ‘buyers’ of the stock; there is only one seller.
The consensus price target, which was just over £60 six months ago, now stands at £84, suggesting the City expects the shares to perform strongly in the near-term.