Newmont Corporation (NYSE:NEM) is Loving the Price of Gold


Newmont Corp. (NYSE:NEM): Deutsche Bank reiterated its Buy rating and raised its price target to 70 from 54.

NEM has seen its shares surge since merging Newmont and Goldcorp to create the world’s Top gold-mining stock. With a market cap of $50-B, the company is loving the price of gold at near 10 yr highs.

The initial reaction might appear the investors felt a bit let down by its earnings report, I am not.

US based Newmont has a lot going for it, and high gold prices might be just 1 driver that should keep gold investors interested in the stock for the long term.

Take a look

Newmont’s net income from operations came in at $837-M, versus $113-M a year ago. On an EPS basis, that’s 1.04 Vs just 0.21/share a year ago. Newmont’s adjusted EPS were at 0.40, after backing out 1-time items.

The higher revenues of $2.581-M rose just over 43% from a year ago, reflecting higher prices and higher production. Newmont’s attributable gold production was up 20% to 1.5-M oz, while its average realized gold price surged by 22% to 1,591 oz.

The company added $939-M in new cash from operations in Q-1 of Y 2020, but it also previously withdrew its Y 2020 guidance due to production deferrals that could impact its costs. Its net cash position was $3.7-B, and its long-term debt was just above $6-B.

Revenues rose; what many investors did not factor in was that its costs applicable to sales rose nearly 22% to 1,140 oz, and its Key measurement of the all-in sustaining costs rose by 14% to 1,030 oz.

The Key issue behind the costs is that there were higher capital spending and maintenance costs, some of which were tied to C-19 coronavirus chaos. This was a time when some global mining outfits had entire projects closed down or on a skeleton crew due to travel restrictions and working conditions.

We see Newmont’s Northside way higher, if the $3,000 price outlook from a Top firm happens. Newmont is on our C-19 coronavirus chaos winner’s list.

Newmont shines is in its unrivaled mineral reserves of 95.7 oz of gold. The company recently hiked its dividend to 1.54%, when so many other companies in the world are paring or pausing dividends to conserve capital.

Wall Street analysts hiked their price targets ahead of Newmont earnings call too:

  • BofA Securities reiterated its Buy rating and raised its price objective from 73 to 82.
  • Deutsche Bank reiterated its Buy rating and raised its price target to 70 from 54.
  • JPMorgan reiterated its Overweight rating and raised its price target to 73 from 70.
  • Raymond James reiterated its Outperform rating and raised its price target from 68 to 73.
  • TD Securities reiterated its Buy rating and raised its price target to 83 from 81.

Analysts are calling for earnings of 2.29/share in Y 2020 and 3.13/share in Y 2021, with revenues rising over 13% to $11-B this yr and $11.8-B next.

Newmont’s stock price finished at 62.43 Wednesday, within its 52-wk trading range of 29.77 – 65.05. It has a consensus stock price target is at 65.17 expect it to be raised after the adjustments have been added.

There is deep support beginning at 61.30 and the resistance is Nil, on a runup in the price of gold to the 3000 oz mark, we can imagine NEM at 150ish. Our technical outlook is Bullish to Very Bullish across the board.

Newmont is the King of Gold Miners!

For a Free copy of the latest HeffX Gold Report click here.

Have a healthy day, Keep the Faith!