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Investing.com -- UBS upgraded Newmont Corporation to “Buy” from “Neutral” and raised its price target to $60 per share, citing a more supportive macro backdrop for gold and potential for sustained shareholder returns.
The firm lifted its gold price forecast to $3,500 per ounce in 2026, arguing the commodity is set to benefit from a shift in investor sentiment following recent macroeconomic shocks, echoing post-crisis rallies after the global financial crisis and COVID-19.
Newmont has underperformed both the gold price and GDX (NYSE:GDX) by roughly 40% over the last five years, UBS said, adding that the stock's valuation has de-rated from an average 8x to around 6x at spot.
The bank expects that underwhelming expectations and achievable 2025 guidance should create positive operational momentum.
UBS forecasts Newmont will generate a 2026 free cash flow yield of around 10%, supported by a high gold price and cost controls.
The miner is expected to receive about $3.2 billion in cash by the end of Q2 2025 from post-merger divestments, most of which UBS anticipates will be returned to shareholders via $3 billion in buybacks next year.
Beyond 2025, there is potential for additional capital projects like Red Chris, but we view major spending as more likely in 2027 or later, analysts wrote.
UBS also noted Newmont is on track to fall below its $5 billion net debt target in the first half of 2025, paving the way for further capital returns.
Newmont has struggled with operational consistency, repeatedly missing production and cost guidance over the past five years.
However, UBS believes the company’s 2025 production forecast of 5.6 million ounces is likely conservative, and any cost improvements not currently factored into consensus could serve as a positive catalyst.
UBS lifted its 2025 and 2026 gold price estimates by 11% and 23%, respectively, which drives significant earnings upgrades for Newmont.
Despite lowering its target EV/EBITDA multiple from 6.0x to 5.5x to reflect lower multiples at peak gold prices, UBS raised its price target to $60 per share.