‘Golden opportunity’: Morgan Stanley says it’s a good time to buy gold stocks — and names its top global picks
Now is a good time to buy gold stocks, according to Morgan Stanley. Tensions in the Middle East, brought on by the Israel-Hamas war, had triggered a gold “safe-haven” rally as investments in the precious metal picked up. The rally has since fizzled and gold spot prices were trading at $1,950.12 on Nov. 8, up around 0.02% the year to date. Notably, gold stocks underperformed gold prices by about 20% in the last three months, the investment bank’s analysts, led by Sandeep Peety, wrote in a Nov. 2 note. That presents “an opportunity to gain exposure to the sector,” they added. Morgan Stanley named several stocks to play the “golden opportunity.” ‘Preferred play’ Morgan Stanley named Endeavour Mining , a London-headquartered multinational mining company, as its “preferred play.” The bank, which gave the stock an overweight rating, cited the company’s “low-cost position,” “attractive valuation” and “superior growth profile.” The bank raised its price target to £1,950 ($2,393) from £1,852, implying around 15.3% potential upside from its Nov. 7 close. EDV-GB YTD mountain Year-to-date shares of Endeavour Mining. Catalysts for the company’s growth in the next 12 months include: potential approval of Tanda-Iguela, its Ivory Coast exploration property; an update on its shareholder returns program; and the first production from its expanded Sabodala-Massawa mine in Senegal, Morgan Stanley said. The analysts reckon that the successful execution of its growth projects, along with approval of Tanda-Iguela, may trigger a re-rating, as the company will then have a more diversified portfolio. However, they noted risks such as unfavorable gold prices and geopolitical uncertainty in the countries where the company has operations in. Other overweight-rated stocks Other gold mining companies that the investment bank gave an overweight rating include Australia’s Evolution Mining and Regis Resources and China’s Zijin Mining Group . Morgan Stanley has a price target of 4.25 Australian dollars ($2.74) for Evolution Mining — giving it 14.6% potential upside from its Nov. 7 close — and AU$1.95 for Regis Resources, or around 6% upside. It has a price target of 16.5 yuan ($2.27) on Zijin Mining, giving it upside of 37.4%. Morgan Stanley is also overweight-rated on Peruvian precious metals company Compania De Minas Buenaventura . The bank has a price target of $10.30, giving it 20.6% upside. — CNBC’s Michael Bloom contributed to this report.
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