RBC sees construction impact on Northern Star stock performance By Investing.com

On Friday, RBC Capital revised its price target for Northern Star Resources (NST:AU) (OTC: NESRF) shares, adjusting the figure to AUD16.50 from the previous AUD17.00. Despite this change, the firm maintained an Outperform rating for the stock.

The adjustment follows the company’s fourth-quarter performance and future financial year 2025 (FY25) projections, which showed softer results compared to RBC Capital’s estimates and consensus.

Northern Star’s fourth quarter was characterized by solid performance; however, its FY25 guidance did not meet the expectations set by RBC Capital and the consensus. The analyst pointed to slight shortfalls in gold production, all-in sustaining costs (AISC), and growth capital expenditures, contributing to an approximate AUD560 million reduction in free cash flow (FCF). Consequently, the estimated FCF yield for FY25 has been reduced to around 4%.

The analyst noted that Northern Star’s stock had been underperforming relative to its peers before the announcement of these results. Market expectations might have been modest in anticipation.

Despite the reduced expectations for the company’s FY25 earnings before interest, taxes, depreciation, and amortization (EBITDA) by 9%, the valuation remains at 4.9 times enterprise value to EBITDA (EV/EBITDA) ratio, with a lower 3.6 times ratio projected for FY26.

The continued Outperform rating is supported by the ongoing construction of the AUD1.5 billion KCGM mill expansion. RBC Capital’s analyst emphasized the potential value, maintaining confidence in the stock with a revised price target of AUD16.50.

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