Barrick Gold stock (NYSE: GOLD) has experienced an 11% decline year-to-date despite the upward trend in gold prices, which have risen from around $2,050 per ounce in early January to over $2,300 per ounce currently. The company’s Q1 results were weaker than expected, with production facing headwinds due to factors such as slower ramp-up of the Pueblo Viejo mine and maintenance-related activity. Costs have also been trending higher, with all-in sustaining costs for the gold business increasing by 8% compared to last year.
The stock has suffered a sharp decline of 40% from early January 2021 to around $15 now, while the S&P 500 has seen an increase of about 40% over the same period. Barrick Gold underperformed the S&P in 2021 and 2023, with returns of -17% and 5% respectively. Consistently beating the S&P 500 has been challenging for individual stocks in recent years, including heavyweights in the Materials sector and megacap stars like Google, Tesla, and Microsoft. The Trefis High Quality Portfolio, consisting of 30 stocks, has outperformed the S&P 500 each year over the same period.
Barrick’s production is expected to pick up in the coming quarters, with the expansion of the Pueblo Viejo plant ramping up in Q2 and the restart of the Porgera mine. The company is guiding for gold production of 3.90 to 4.30 million ounces for the full year, which could help drive down costs. The sentiment towards precious metals prices has been bullish, with central banks diversifying their reserves by holding more gold. Barrick’s move to scale up its copper business could also provide an upside for the stock, given its applications in industries like electric vehicles and renewable energy.
The company’s stock price is slightly ahead of the current market price, with a $17 price estimate. Analysts are monitoring Barrick Gold’s valuation and revenue streams to assess its performance in the current uncertain macroeconomic environment, which includes high oil prices and elevated interest rates. The company’s performance will be closely watched over the next 12 months to see if it can recover from its recent underperformance compared to the S&P 500. Overall, Barrick Gold’s outlook remains positive, with potential for growth in both its gold and copper businesses.
