Shares in Newmont Corporation (ASX: NEM) recently hit a 12-month high; however, the analyst team over at Barrenjoey believe there's still plenty of potential and has a bullish share price target on the stock.
Barrenjoey has released a new research report into Newmont, with the catalyst being fellow gold miner Barrick Mining reporting its fourth-quarter results.
This affects Newmont as two gold mines, which Barrick runs, account for about 20% of Newmont's business, according to the Barrenjoey team.
Apparently, the guidance for these assets for 2026 and beyond was "softer than the market is expecting'', Barrenjoey said, and it has factored in a 2% downgrade to Newmont's 2026 EBITDA as a result.
They maintain their overweight rating on the stock, however, and said there was room to improve on Newmont's behalf.
As they said:
Newmont's business is currently operating below its full potential, with a number of assets running on lower grades, or with investments being made to improve them. Returning the business to its potential should drive production growth from about 5.6 million ounces in 2025 to about 6.0 million ounces by 2028. We think execution on business improvement initiatives could drive earnings growth and a potential multiple re-rating.
Image source: Getty Images
Balance sheet in 'great shape'
The Barrenjoey team said they expected the company to have net cash of more than US$1 billion by the end of 2025, with that figure to be reported soon, and said the balance sheet was in "great shape''.
They also predict the company will increase its dividend, despite Newmont previously saying it preferred share buybacks to return capital to shareholders.
The Barrenjoey team said:
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.
Barrenjoey is forecasting 2026 production of 5.27 million ounces of gold at an all-in sustaining cost of US$1823 per ounce.
Barrenjoey has a 12-month price target of $215 on Newmont shares, which would be a new 12-month high for the stock, compared with its current price of $163.99.
