Why are brokers so bullish on the Northern Star share price?

Brokers see plenty of upside for the gold miner in 2022.

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Key points

  • Analysts are bullish on Northern Star shares, baking in considerable upside for the next 12 months
  • Shares are trading deep in the red this year to date, extending losses brought on last year
  • In the last 12 months, the Northern Star share price has slipped 20% 

The Northern Star Resources Ltd (ASX: NST) share price is pushing higher today and is now 0.8% in the green at $8.80 apiece.

The gold miner — whose assets include Australia’s largest underground gold mine, Cadia Valley in NSW – has struggled so far in 2022.

Meanwhile, the gold price has taken a trip downwards these past few weeks after surging to near five-year highs in March.

Gold now trades at US$1,837 per troy ounce after the recent pullback.

What are brokers saying?

Analysts at JP Morgan are heavily bullish on the Northern Star share price. In a recent note, the broker mentioned that Northern Star is amongst its favourite picks of the Aussie gold miners.

Despite a challenging quarter, analysts reckon the investment case for Northern Star remains intact and, taking a long-term view, not much has changed fundamentally for the company.

“Operational performance was weaker than we expected across the board, with planned and unplanned outages at the KCGM seeing throughput 12% lower quarter-on-quarter,” it noted in a recent note.

“Pogo production and cost guidance has been downgraded relating to higher development and a focus on delivering more mining fronts. Group production guidance has been retained,” it added.

Consequently, Northern Star is potentially one for the future, JP Morgan says, and it remains a top choice for its clients.

[Northern Star] remains a favoured pick of our gold coverage with solid valuation support (0.88 times P/NPV), an excellent growth pipeline (7% compound annual growth rate (CAGR) to FY26), and paying a decent 3.6% dividend yield in FY23.

We upgrade to overweight with an $11 per share December 2022 price target.

Meanwhile, analysts over at RBC Capital Markets are equally as bullish on the stock, valuing it at $13.25 per share in the process.

Alex Barkley of RBC noted that Northern Star has been making good inroads in its gold exploration and discovery programs.

“The result continues NST’s long track record of organic gold discovery, with the two shortest life sites the main beneficiaries in this year’s annual update,” he wrote.

In late May, the teams of Macquarie and Canaccord Genuity each upgraded their price targets on the gold miner to $14 and $15.15 respectively, joining a long list of bullish analysts on the stock.

According to Bloomberg data, 15 out of the 16 analysts covering Northern Star rate it as a buy right now, with the consensus price target resting at $12.59 among the group.

Northern Star share price snapshot

In the last 12 months, the Northern Star share price has slipped 20% into the red and is down almost 7% this year to date.

Motley Fool contributor Zach Bristow 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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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