(Recasts, adds analyst comments)
Oct 15 (Reuters) - Genuity Capital expects weak third-quarter earnings at Canadian gold producers, as they are hit by energy and labour costs, and declines in realized gold prices.
"We have lowered the target prices for the gold equities by 8 percent on average," analyst Tony Lesiak said.
But Lesiak expects shares of gold producers under its coverage to have an average return of 55 percent over the next 12 months. "Production growth, the strengthening U.S. dollar and declining fuel and reagent prices could help expand producer margins into the fourth quarter," he said.
Lesiak's top picks among senior gold producers were the world's largest gold producer Barrick Gold Corp (ABX.TO) and Goldcorp (G.TO). Among intermediate gold producers, Northgate Minerals Corp NGX.TO and Iamgold Corp (IMG.TO) were the top picks.
Lesiak upgraded Agnico-Eagle Mines Ltd (AEM.TO), Eldorado Gold Corp Ltd (ELD.TO) and Alamos Gold Inc (AGI.TO) to "buy" from "hold," citing a recent fall in the companies' share prices.
The following table lists Lesiak's rating and price target on shares of Canadian gold producers:
Company Price Target (C$)
Northgate Minerals Corp NGX.TO 2.50 2.75
Iamgold Corp (IMG.TO) 9.00 9.50
Yamana Gold Inc (YRI.TO) 11.50 14.50
Eldorado Gold Corp Ltd (ELD.TO) 8.50 9.00
Barrick Gold Corp (ABX.TO) 52.50 54.00
Goldcorp (G.TO) 45.00 48.00
Alamos Gold Inc (AGI.TO) 6.75 7.00
Agnico-Eagle Mines Ltd (AEM.TO) 72.00 75.00
Golden Star Resources Ltd GSC.TO 1.75 2.00
Gammon Gold Inc GAM.TO 8.50 9.50
Kinross Gold Corp (K.TO) 21.00 22.00 (Reporting by Adveith Nair in Bangalore; Editing by Pratish Narayanan)