Can the Northern Star (ASX:NST) share price hit $13 by Christmas?

Could Northern Star shares rise to $13 by Christmas Day?

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A photo of a wet dirty hand picking up a piece of gold amongst black rocks

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Might it be possible that the Northern Star Resources Ltd (ASX: NST) share price could rise to $13 by Christmas?

Brokers regularly update their price targets for businesses. That is where a broker believes that the share price of the company will be in 12 months.

Recently, some brokers updated their price targets for the Northern Star share price.

Price target on the Northern Star share price

The brokers at Macquarie Group Ltd (ASX: MQG) have a price target on the business of $13. That suggests that the analysts believe that the gold miner’s shares could rise by around 37% over the next year. That’s not necessarily where the broker thinks the Northern Star share price will be at Christmas, though it does indicate the direction Macquarie thinks that Northern Star shares are headed.

This current price target was decided in reaction to the gold miner’s latest quarterly update.

FY22 first quarter

Northern Star said in the first three months of FY22, to September 2021, it said that the gold sold total was 386,160 ounces at an all-in sustaining cost (AISC) of A$1,594 per ounce (or US$1,180 in US dollar terms).

The company broke this down into three separate areas.

Kalgoorlie saw 232,324 ounces of gold sold at an all-in sustaining cost of A$1,533 per ounce.

Yandal saw 109,844 ounces of gold sold at an all-in sustaining cost of A$1,345 per announce.

Pogo saw 43,992 ounces of gold sold at an all-in sustaining cost of US$1,751 per ounce.

The group all-in cost (AIC) was A$1,933 per ounce.

Northern Star said that, as it had previously told the market, the planned FY22 production is weighted towards the second half, driven by increasing grades at Yandal and increasing mining rates at Pogo. The AISC is expected to fall over the year.

Guidance for the whole financial year can have an impact on the Northern Star share price. The large gold miner said that it’s on track to meet FY22 guidance of between 1.55 million to 1.65 million ounces at an AISC of between A$1,475 per ounce to A$1,575 per ounce.

In terms of the financial numbers, the three months to September saw an average realised price of A$2,345 per ounce, leading to sales revenue of A$848 million. This helped the business generate cash earnings of between A$165 million to A$175 million.

At the end of September 2021, it had cash and bullion of A$756 million after paying A$110 million in dividends and investing A$123 million in net growth capital and exploration.

The corporate bank debt reduced to A$262 million, using funds that were received from the Kundana asset sale (for $400 million).

Its hedge book was 839,819 ounces at an average price of A$2,347 per ounce at 30 September 2021.

In terms of the growth projects, it said that it’s progressing in line with its strategy to become a 2 million ounces per year producer by FY26, Kalgoorlie Consolidated Gold Mines (KCGM) open put development and Thunderbox mill expansion in Yandal.

Macquarie thinks that Pogo could be a driver for Northern Star.

Northern Star share price valuation

On Macquarie’s numbers, Northern Star shares are valued at 58x FY23’s estimated earnings with a grossed-up dividend yield of 3.3%.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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