Shares of Gold Fields Limited GFI experienced a downturn in early trading on Friday, Feb. 2.
The Johannesburg, South Africa gold mining company has outpaced its peers over the past 12 months. However, a premium valuation is called into question due to the “operational risks we see across the portfolio,” according to BMO Capital Markets’ Raj Ray.
Insights from the Analyst: Ray downgraded the rating for Gold Fields from Market Perform to Underperform, while reducing the price target from $14 to $12.
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Assessment of Gold Fields: The stock’s ascent in the last 12 months has been driven by index flows and gold price appreciation, as noted in the downgrade by Ray.
“Gold Fields’ relative outperformance over the last 12 months has been despite dearth of positive news flow including delays at Salares Norte, operational underperformance in Australia (~45% of annual production) and South Africa (~14% of annual production) and significant churn in the C-suite,” the analyst wrote.
“We see potential for the 2023 results and 2024 outlook to disappoint when the company reports on February 22, 2024,” he added. Ray lowered the 2024 and earnings estimate from $1.16 per share to 98 cents per share.
Market Response: Shares of Gold Fields had declined by 8.73% to $14.43 at the time of publication on Friday.
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