Northern Star Resources Ltd (ASX: NST) shares have been struggling in recent months.
Due to production issues, the ASX 200 gold giant is down 32% from its 52-week high to $21.75.
While this is disappointing for shareholders, Bell Potter thinks it could be a buying opportunity for the rest of us.
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What is the broker saying about this ASX 200 gold giant?
Bell Potter was very disappointed to see the company downgrade its FY 2026 guidance for a second time last week. It said:
NST have downgraded FY26 guidance for a second time this FY, just when we thought NST were seeing light at the end of the tunnel. Gold sales are now expected to be at or around 1,500koz down from the previously revised 1,600-1,700koz guidance (BPe 1,601koz, VA 1,614koz prior to the downgrade).
The reasons driving the downgrade primarily stemmed from KCGM mill throughput challenges with intermittent outages in the float circuit and electrical issues compounding downtime. Throughput over the remainder of the year is likely to average ~9Mtpa vs the initial 12Mtpa FY26 guidance. Adding insult to injury, productivity at Jundee continued to disappoint with grades failing to meet expectations and prompting a shift in resources to higher-margin operations.
While the ASX 200 gold stock has reaffirmed its cost guidance for FY 2026, Bell Potter believes that this will be removed with its third-quarter result. The broker explains:
Management reaffirmed AISC guidance of A$2,600- $2,800/oz, however on our assessment this is likely to be pulled potentially at the 3Q result. Total group gold sales across Jan-Feb were 220koz (2QFY26 348koz), we have pared back our estimate for KCGM, adjusting throughput to 7.4Mtpa (annualized) in 3Q and 10.4Mtpa in 4Q at an average grade of 1.8g/t. We remain sceptical on the throughput grade required to meet the updated guidance, given mined grades are tracking around 1.6g/t and being delivered for processing through the new Mill in FY27.
Should you buy Northern Star shares?
Despite the many negatives, Bell Potter remains positive on the ASX 200 gold giant and believes it could be a good time to buy.
It has retained its buy rating and $35.00 price target, which implies potential upside of 60% for investors over the next 12 months.
Commenting on its recommendation, the broker said:
Our Target Price is unchanged at $35.00/sh, and we maintain our Buy recommendation. The disappointing downgrade however is likely to remain as a significant overhang for the stock over the next 12-18m until the ramp up of the upgraded mill at KCGM commences. We see potential positives from asset rationalisation, given the high capital and operating costs at the likes of Jundee and Thunderbox.
