In a Sept. 11 research note, analyst Andrew Kaip reported that his firm BMO Capital Markets upgraded its rating to Outperform and raised its target price to $50 per share from $40 on Newmont Goldcorp Corp. (NEM:NYSE). Driving those positive changes are BMO's improved outlook for the mining company and the precious metals over the next roughly three years.
"Newmont Goldcorp is in the early stages of a turnaround, and we see the risk-reward as compelling, supported by a valuation discount we expect to begin to narrow as the company executes against its strategy," Kaip added. The U.S.-based miner's stock is currently trading at about $39.84 per share.
Also, Kaip presented the primary reasons why the market is likely to rerate Newmont Goldcorp.
One, its management team targets stable production, of 6,000,000–7,000,000 ounces, over the next several years, supplemented by its production of byproducts. Whereas the company could divest of assets during that period, BMO expects they would only be noncore ones.
Two, Newmont Goldcorp "established an exemplary track record of consistency and has delivered over $2 billion in improvements since 2013 through its Full Potential program," Kaip pointed out. "Investors are beginning to warm up to the turnaround and Full Potential efforts, with 40% of the $365 million to be realized this year, 80% next year and 100% in 2021."
Three, the mining company has a deep pipeline of staged projects "with targeted internal rates of return greater than 15," indicated Kaip.[NLINSERT]
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Newmont Goldcorp, a company mentioned in this article.
Disclosures from BMO Capital Markets, Newmont Goldcorp, September 11, 2019
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of our compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to Newmont Goldcorp within the past 12 months.
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Newmont Goldcorp within the past 12 months.
Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to Newmont Goldcorp within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Newmont Goldcorp within the past 12 months.
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Newmont Goldcorp.
Disclosure 6A: Newmont Goldcorp is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6C: Newmont Goldcorp is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 9B: BMO Capital Markets makes a market in Newmont Goldcorp in United States.
Disclosure 16: A research analyst has extensively viewed the material operations of Newmont Goldcorp.
Disclosure 17: Newmont Goldcorp has paid or reimbursed some or all of the research analyst's travel expenses.
For Important Disclosures on the stocks discussed in this report, please click here.