Barrick Gold Upgraded on Solid 1Q Results

Barrick Gold Corp. (ABX) was upgraded to “buy” from “hold” by Blackmont Capital’s Richard Gray after the company reported solid first quarter results. However, adjusted earnings per share [EPS] of $0.62 were below the analyst’s forecast of $0.66 and production of 1.74 million ounces of gold was below his 1.93 million projection.

Following up on first-quarter cost-containment trends demonstrated by Newmont Mining Corp. (NEM) and Goldcorp Inc. (GG), Barrick’s average cash costs came in at $393 per ounce – below Mr. Gray’s forecast of $396. More good news came from the miner’s margin on production, which rose for the fourth straight quarter to $532 per ounce, up 26% from the fourth quarter of 2007.

While the analyst acknowleged that Barrick faces cost challenges at projects like Pueblo Viejo in the Dominican Republic, Cerro Casale in Chile and Cortez Hills in Nevada, he believes the recent sell-off in its shares presents a compelling entry point. His price target is $C45 per share, roughly 10% higher than its current level despite a recent run-up.