The share price of Newmont Corporation (ASX: NEM) has recently touched a 12-month peak, but a prominent analyst team at Barrenjoey believes there’s still significant upside potential, setting a bullish price target for the stock.
Barrenjoey’s Insight into Newmont’s Future
Barrenjoey has recently unveiled a new research report focusing on Newmont, with the impetus for this analysis stemming from the quarterly results released by fellow gold miner, Barrick Mining. The connection is substantial, as two gold mines operated by Barrick contribute approximately 20% to Newmont’s overall business, according to the Barrenjoey team.
The report highlights that Barrick’s guidance for these joint assets, extending into 2026 and beyond, was “softer than the market is expecting.” Consequently, Barrenjoey has adjusted its forecasts, factoring in a 2% reduction to Newmont’s 2026 Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA).
Despite this minor revision, Barrenjoey maintains its “overweight” rating on Newmont shares. The analysts are confident that the company has considerable room for operational improvements and growth.
Unlocking Newmont’s Untapped Potential
The Barrenjoey team’s outlook is optimistic, with the core belief that Newmont’s operations are currently underperforming their full capacity. They point to several assets that are either processing lower-grade ore or are undergoing necessary investments to enhance their efficiency and output.
The strategy, as articulated by Barrenjoey, is to return these assets to their optimal potential. This strategic focus is expected to fuel production growth, with projections indicating a rise from approximately 5.6 million ounces of gold in 2025 to around 6.0 million ounces by 2028. The analysts are of the view that successful execution of these business improvement initiatives could not only drive significant earnings growth but also lead to a re-rating of the company’s valuation multiples.
A Robust Balance Sheet and Enhanced Shareholder Returns
Beyond operational improvements, Barrenjoey’s analysis also underscores the strength of Newmont’s financial position. The team anticipates that the company will report net cash exceeding US$1 billion by the end of 2025, a figure that is expected to be disclosed imminently. This robust financial standing has led them to describe Newmont’s balance sheet as being in “great shape.”
Furthermore, the analysts predict that Newmont will increase its dividend payments. This forecast is noteworthy, given the company’s previous statements indicating a preference for share buybacks as a mechanism for returning capital to shareholders.
Barrenjoey elaborates on this point:
“Newmont has consistently guided the market that cash returns were most likely to be driven via buybacks rather than dividends. Despite this we are forecasting a lift in the quarterly dividend to US$0.40 per share. Why? Basically the very strong balance sheet, forecast free cash flow and the fact that there has been a reduction in shares on issue from the buyback. Newmont’s shares on issue of 1,089m is a reduction of about 6% from the time of the Newcrest transaction and so, if dividend per share is not lifted, Newmont would be in practice reducing dividends by 6% in US$ terms.”
This strategic dividend increase, coupled with the reduction in outstanding shares due to buybacks, signals a commitment to enhancing shareholder value.
Production Forecasts and Price Targets
Looking ahead, Barrenjoey has projected Newmont’s production for 2026. They forecast the company to produce 5.27 million ounces of gold, with an anticipated all-in sustaining cost (AISC) of US$1823 per ounce.
Based on their comprehensive analysis, Barrenjoey has set a 12-month price target of $215 for Newmont shares. This target represents a significant increase from the current trading price of $163.99, suggesting a substantial potential uplift for investors.
Key Takeaways for Investors
- Operational Upside: Newmont is seen as having substantial room for improvement in its operational efficiency and production output.
- Strong Financials: The company boasts a robust balance sheet with significant projected net cash.
- Enhanced Shareholder Returns: An anticipated increase in dividends, alongside ongoing share buybacks, points to a growing focus on returning value to shareholders.
- Bullish Price Target: Barrenjoey’s price target suggests a considerable upside potential for Newmont’s share price.
Investors considering Newmont should monitor the company’s execution on its business improvement initiatives and its ongoing financial performance. The strategic shift towards potentially higher dividends, alongside the existing buyback program, also presents an attractive proposition.
