S&P/ASX 200 Index (ASX: XJO) gold stock Westgold Resources Ltd (ASX: WGX) has been delivering stellar returns in recent months.
How stellar?
Well, at market close on 1 August, you could have picked up shares for $2.53 each. At that stage, the stock was down 23.5% since market close on 13 June.
But if you'd channelled your inner Warren Buffett to "be greedy when others are fearful" and snapped up shares in the ASX 200 gold stock following the sell-off, I'm certain you wouldn't regret it today.
On Friday, Westgold shares closed up 2.61%, ending the day trading for $5.51 apiece. That sees the gold miner's share price up 117.8%. In only two months! The stock also trades on a 0.6% unfranked dividend yield.
Though the share price is unlikely to more than double again in the next two months, the team at Macquarie Group Ltd (ASX: MQG) maintains a bullish outlook and an outperform rating on Westgold shares moving forward.
Here's why.
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Why the ASX 200 gold stock can keep marching higher
Westgold shares closed up 10.7% on Wednesday after the miner reported on its three-year production outlook (3YO).
The ASX 200 gold stock said its "high confidence plan" will see all-in sustaining costs (AISC) come down and production ramp up over the next three years.
"Westgold's three-year outlook articulates a high confidence, executable plan that sees the business step up from 326koz of production in FY25 to more than 470koz by FY28," Westgold CEO Wayne Bramwell said.
He added that, "The 3YO is conservative by design."
Following on that update, Macquarie said, "WGX's 3YR outlook beat consensus on production (+4%) and AISC (-10%) over the forecast period. Growth capex was slightly higher (+3%)."
The broker noted:
WGX outlined FY26/27/28 guidance/ outlook of 365koz/420koz/470koz, a 2%/1%/7% beat versus Visible Alpha (VA) consensus, and AISC of A$2,750/2,456/2,499/oz, 5%/15%/10% lower (better) than VA.
Production growth primarily comes from Murchison (197koz in FY25 to 306koz in FY28), while Southern Goldfields displays incremental growth (129koz in FY25 to 164koz in FY28). WGX considers the 3YO as 'conservative' as it excludes organic growth opportunities such as the Fletcher Zone at Beta Hunt.
This led Macquarie to increase its price target for the ASX 200 gold stock by 19% to $5.60 a share, with the broker forecasting "+30% EPS increases over FY27-31E".
Connecting the dots on its outperform rating, Macquarie concluded:
The 3YO was an important de-risking event and one that was highly anticipated by the market. The improved production/AISC outlook vs. consensus was a positive, with the focus now on consistent delivery of both operational and study outcomes.
