Spot gold (GCY00) is surging to new record highs above $2,460 in today’s session, fueled sharply higher by rising expectations for imminent Fed rate cuts. While gold futures (GCQ24) took a breather in June, the precious metal has ramped higher as expectations for a Fed rate cut in September from Chair Jerome Powell and colleagues have surged above 93%, according to the CME FedWatch Tool.
Sprott Asset Management’s Senior Portfolio Manager John Hathaway believes the yellow metal hitting $3,000 per ounce within a year isn't far-fetched, and highlighted the potential for a 15% to 20% gold price rise to have an outsized impact on mining stocks. In a tech-dominated market, Hathaway sees the potential for a pivot toward precious metals stocks as investors seek diversification.
This trend favors mining giants like Newmont Corporation (NEM), which is hitting fresh highs of its own in today’s trading. Analysts at CIBC recently upgraded Newmont, calling out its obvious appeal as the only gold producer included in the benchmark S&P 500 Index ($SPX). For investors looking to add exposure to gold miners, here’s a closer look at this leading name in the group.
About Newmont Stock
Founded in 1916, Denver-based Newmont Corporation (NEM) is primarily involved in gold production and exploration. With a market cap of $54.6 billion, the company is also engaged in exploring copper (HGU24), silver (SIU24), zinc, and lead.
Shares of Newmont have gained 7.7% over the past 52 weeks, and the stock is up 17% YTD. That lags the performance of both cash gold and the broader SPX over both time frames, which seems to confirm that NEM has room to catch up with the gains of those benchmark assets, as Hathaway’s analysis indicates.
In terms of valuation, NEM stock trades at 19.02 times forward earnings, which is lower than its own five-year average of 21.88x.
Newmont is also a reliable dividend stock, having rewarded shareholders for an impressive 34 consecutive years. On June 27, the company continued its streak, paying a quarterly dividend of $0.25 per share.
With an annualized dividend of $1.00 per share, Newmont’s dividend yield stands at 2.11%, outpacing the S&P 500 SPDR’s (SPY) 1.22% yield. This long-standing commitment to shareholder returns underscores Newmont’s financial stability and dedication to its investors.
Newmont Beats On Q1 Earnings
On April 25, shares of Newmont surged 12.5% after the company reported stronger-than-expected Q1 earnings results. Sales soared 50.2% year over year to $4 billion, while adjusted EPS rose 37.5% to $0.55, surpassing forecasts by 57.1%.
The company produced 1.7 million attributable gold ounces and 489 thousand gold equivalent ounces (GEOs) from copper, silver, lead, and zinc, driven by 1.4 million gold ounces from its Tier 1 Portfolio.
Newmont’s sale of Lundin Gold financing facilities for $330 million aligns with its portfolio optimization strategy. With cash payable in two tranches, this move supports Newmont’s $2 billion near-term cash improvement goal, boosting profitability and resilience while maintaining exposure to the Fruta del Norte mine through equity interest.
For 2024, management sees Newmont’s total attributable gold production reaching 6.9 million ounces, while capital spending on development projects is anticipated to be $1.3 billion.
Newmont Corporation is expected to unveil its Q2 earnings results after the market closes on Wednesday, July 24. Analysts tracking Newmont expect its EPS for the quarter to surge 60.6% year over year to $0.53.
Over the longer term, fiscal 2024 EPS is anticipated to climb 54% annually to $2.48 and rise by another 25% to $3.10 in fiscal 2025.
What Do Analysts Expect for Newmont Stock?
On July 10, CIBC upgraded Newmont to “Outperform” from “Neutral,” with a new $61 price target, up from $46.
In a note accompanying the upgrade, CIBC called out Newmont’s unique status as the S&P 500’s sole gold producer, and said the company should benefit from heightened investor interest in gold amid the current macroeconomic backdrop.
In particular, CIBC boosted its gold price forecast to $2,290 for 2024 and $2,600 for 2025, citing expectations for rate cuts even as inflation remains persistent. The firm added that "the specter (and spectacle) of a second Trump presidency looms on the horizon and could cause a parabolic shift in the gold price in 2025.”
Newmont stock has a consensus “Moderate Buy” rating in the analyst community. Out of the 17 analysts covering NEM, nine suggest a “Strong Buy,” one advises “Moderate Buy,” and the remaining seven analysts are playing it safe with a “Hold” rating.
The average analyst price target of $50.27 indicates a potential upside of 3.5% from current price levels, while CIBC's new Street-high target implies expected upside of 25.6%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
