BofA Securities has resumed coverage of Harmony Gold Mining Company Limited (NYSE: HMY) with a Neutral rating.
The firm set a price objective (PO) of ZAR210 for the South African gold producer, which is currently dealing with high all-in-sustaining costs (AISC) estimated at around $1,800 per ounce for the fiscal year 2025.
The coverage reinstatement comes with a cautionary note regarding the company's safety record. Harmony Gold's less-than-ideal safety and fatality records, which are considered inferior to those of its competitors, could potentially dissuade some investors from purchasing its shares.
Despite these concerns, BofA Securities' metals strategist holds a bullish outlook on gold, predicting a rise to $3,000 per ounce by 2025. If this prediction materializes, Harmony Gold's net present value (NPV) could see an approximate 270% increase to ZAR360 per share.
The valuation of Harmony Gold reflects a trading at approximately 2.0 times price-to-net present value (P/NPV), which is above its historical average of 1.3 times. BofA Securities' analysis suggests that the current share price is factoring in a gold price of roughly $2,450 per ounce. This stands at a discount when compared to the current spot price of gold, which is at $2,700 per ounce.
BofA Securities' stance on Harmony Gold is cautiously optimistic about the overall gold market but remains neutral on the stock due to specific risks associated with the company.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Harmony Gold Mining Company's financial position and market performance. The company's market capitalization stands at $7.35 billion, with a P/E ratio of 15.03. Notably, Harmony Gold has demonstrated impressive revenue growth, with a 24.56% increase in the last twelve months as of Q4 2024.
Two key InvestingPro Tips are particularly relevant to the article's context. Firstly, Harmony Gold is "Trading near its 52-week high," which aligns with the bullish gold price outlook mentioned by BofA Securities. Secondly, the company "Holds more cash than debt on its balance sheet," potentially providing financial flexibility to address the high all-in sustaining costs noted in the article.
These insights, along with 10 additional tips, are available on InvestingPro, offering a more comprehensive analysis of Harmony Gold's financial health and market position.
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