GS recommendation $6 - SAR remains preferred

New research note just out today from Goldman Sachs and includes SAR

Accessible through CommSec if you use their platform

Excerpt:

In this report, we preview the upcoming June Q production reporting and update our estimates for the GS commodity team’s more positive view on gold (+10% to US$1,988/oz for 2021) and copper (+9% to US$2.95/lb). We also mark-to-market the March quarter, lift our AUDUSD FX forecast in line with the forward curve, and roll our long-run year forward to 2024. We revise earnings and 12-month target prices for our coverage; on average, our 2020/2021 EBITDA forecasts have changed by +4%/-8%, with stronger FX offsetting the increased commodity price forecasts for most names. Our 12-month target prices are up by +12% on average after incorporating these updates as well as rolling forward our valuation period by six months to Jun-21.While we remain positive on the gold price, the sector now appears more fully valued (1.2xNAV on our base case, 1.0x at spot).

Our key Buy calls remain: SBM (on CL), SAR, OGC, RSG. While SAR is trading above our target price, it remains our preferred ASX100 gold exposure on relative valuation, production growth, operational delivery and positive catalyst potential. We downgrade EVN and RRL to Sell (from Neutral) on valuation, with both stocks trading at a large premium to our revised NAVs (1.60x and 1.45x respectively) and c.-25% downside to our revised 12-month TPs. We summarise the upcoming quarterlies in Exhibit 1 below, with further detail on our expectations for each company within, including our FY21 forecasts and consensus.