Newcrest – a bargain at these prices?

Editorial director of Switzer
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The gold spot price is edging back up above $1,400 today after a horror time last week, as many dumped the commodity. The price falls obviously had a major impact on many gold stocks, as brokers moved to downgrade the main player in this space – Newcrest Mining (NCM).

Last week Commonwealth Bank cut its rating from Overweight to Neutral and Citi downgraded it to Sell from Neutral. The consensus target price of the eight brokers on FN Arena is $23.85.

The week prior to the fall, Deutsche Bank and JP Morgan had both upgraded the stock to Buy.Opinion on gold, and therefore companies that make a business from digging it out of the ground, as an investment has been divided for centuries. But at these prices - Newcrest trading at just over $16, and at least a 40% discount to FN Arena’s consensus target price – surely the company must be a buy? I asked some of our Switzer Experts for their views. Even gold haters, like Paul Rickard, don’t necessarily dislike Newcrest at these prices.

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