Gold Fields Stock Rally Is Unjustified, Says Bearish Analyst: 'Operational Risks Across Portfolio'

Shares of Gold Fields Limited GFI tanked in early trading on Friday, Feb. 2.

The Johannesburg, South Africa gold mining company has been outperforming its peers over the past 12-months. However, a premium valuation is unjustified in view of the “operational risks we see across the portfolio,” according to BMO Capital Markets' Raj Ray.

The Gold Fields 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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The Gold Fields Thesis: The stock has risen over the last 12 months due to index flows and appreciation in gold prices, Ray said in the downgrade note.

“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.

GFI Price Action: Shares of Gold Fields had declined by 8.73% to $14.43 at the time of publication on Friday.

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