UBS upgrades Newmont Mining stock to Buy on bullish gold outlook By Investing.com

On Monday, UBS analyst Daniel Major upgraded Newmont Mining Corp. (NYSE: NYSE:) stock from Neutral to Buy, also increasing the price target to $50 from the previous $40. Major’s optimism is rooted in a bullish stance on gold prices, with a forecast approximately 30% higher than the current consensus for the year 2025.

This outlook is expected to lead to consensus earnings upgrades, with UBS’s estimated EBITDA for Newmont in 2025 being over 30% higher than the market consensus.

The upgrade comes after a period of underperformance by Newmont Mining compared to both the gold price and its peers, which has been around 60% since 2019.

This underperformance was attributed to the company’s historical inability to meet its own guidance. However, UBS now believes that Newmont’s guidance is achievable, which should create a positive operational momentum and alter the currently skeptical investor sentiment.

Furthermore, UBS anticipates that Newmont will engage in significant divestments, estimating $2 to $4 billion over the next 12 months. These divestments are expected to accelerate the company’s deleveraging process and enhance cash returns to shareholders.

The strategic sales would also help streamline Newmont’s operations, positioning it with one of the most attractive portfolios in the industry. According to Major, post-divestment, Newmont will boast predominantly large, long-life assets in low-risk jurisdictions, along with appealing brownfield growth projects.

The UBS analyst’s comments suggest a turning point for Newmont Mining, with a potential shift in performance and investor perspective on the horizon. The company’s steps towards operational efficiency and financial health, combined with a favorable outlook on gold prices, appear to be the driving force behind the upgraded rating and price target.

In other recent news, Newmont Mining Corp has been the subject of various analyst assessments and financial updates. BMO Capital Markets lowered its price target on Newmont shares to $54, maintaining an Outperform rating.

This adjustment was due to revised projections for Barrick Gold (NYSE:), with whom Newmont operates several joint ventures. Meanwhile, TD Securities raised its stock target for Newmont to $48, citing the company’s successful post-merger asset monetization.

Moreover, the company’s first-quarter results surpassed expectations, prompting BMO Capital Markets to increase Newmont’s price target to $56. In addition to impressive production and cost efficiencies, the company’s significant earnings contributed to this positive adjustment.

In terms of financial performance, Newmont exceeded Wall Street’s forecasts with a notable increase in production and sales, mainly due to the acquisition of assets from Australia’s Newcrest.

The company reported a first-quarter profit with an attributable gold production of 1.7 million ounces, surpassing analyst predictions. Sales for the quarter soared to $4.02 billion, a significant jump from the previous year.

These recent developments highlight Newmont’s robust financial health and strategic planning, which are closely monitored by investors and market watchers.

InvestingPro Insights

As investors digest the UBS analyst’s upgrade of Newmont Mining Corp. (NYSE: NEM), real-time data from InvestingPro provides additional context to the company’s financial health and market performance. The company’s market capitalization stands at a robust $47.07 billion, indicating its significant presence in the industry. Despite a challenging past reflected by a negative P/E ratio of -14.21, analysts are looking ahead with optimism, expecting net income growth and sales expansion in the current year. This forward-looking sentiment is further supported by a notable 13.7% revenue growth over the last twelve months as of Q1 2024, outpacing the quarterly growth rate of 50.17%.

InvestingPro Tips highlight that Newmont has impressively maintained dividend payments for 54 consecutive years, a testament to its commitment to shareholder returns. Moreover, the company’s liquid assets surpass its short-term obligations, suggesting a solid financial footing. For investors intrigued by these insights, there are additional InvestingPro Tips available that delve deeper into Newmont’s financial nuances and future prospects. By utilizing the coupon code PRONEWS24, investors can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights.

Lastly, the recent strong return over the last three months, with a price total return of 21.21%, signals a positive shift in market sentiment that could align with UBS’s optimistic outlook. With analysts predicting profitability this year, Newmont Mining Corp. may indeed be at a turning point, as suggested by the UBS analyst.

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