The Newcrest Mining Limited (ASX: NCM) share price may have climbed 4% higher to $20.57 on Tuesday, but one leading broker believes there is significant downside risk for its shares.
According to a research note out of UBS this morning, analysts at the investment bank have reiterated their sell rating and $13.00 price target.
Should Newcrest Mining's shares fall to this level, it would mean a decline of almost 37% from its current share price.
UBS appears to be bearish on the leading gold miner largely on valuation grounds.
With its analysts forecasting earnings per share of 56 cents in FY 2017 and 59 cents in FY 2018, Newcrest's shares are changing hands at approximately 35x forecast FY 2017's earnings and 33.5x forecast FY 2018's earnings.
By comparison, Northern Star Resources Ltd (ASX: NST) shares are currently trading at 14x forecast FY 2017 earnings.
