On Thursday, RBC Capital Markets adjusted its price target for Newmont Mining Corp. (NYSE:NEM) shares, a leading gold mining company, from $54.00 to $53.00 while maintaining a Sector Perform rating. This revision follows Newmont's third-quarter results, which did not meet the firm's expectations and the broader market consensus. The company's EBITDA was reported to be 17% below RBC Capital's estimates and 16% below the consensus.
The results highlighted two main concerns for the analysts. Firstly, Newmont faced significantly higher costs in the third quarter, and it now anticipates a 9% increase in full-year costs compared to previous guidance. This has raised questions about the company's margin outlook. Secondly, despite the underwhelming results, Newmont completed a substantial $0.5 billion stock repurchase after the second quarter and has approved an additional $2 billion in buybacks.
RBC Capital's analyst commented on the adjustments, stating, "NEM reported 3Q results that were below RBCe and the consensus, with EBITDA -17% RBCe / -16% cons. Key takeaways include (1) sharply higher 3Q costs and full year costs now guided +9% vs. prior which prompt margin outlook questions, and (2) a sizeable $0.5b buyback achieved post-2Q results and $2b in additional repurchases approved. Further to our first impressions analysis, we update our forecasts. Our target declines to $53 (from $54)."
The revision in the price target reflects the analyst's recalibration of expectations in light of the latest financial data from Newmont. Despite the lower target, the Sector Perform rating indicates that RBC Capital views the stock as likely to perform in line with the expectations for the sector as a whole.
Investors in Newmont Mining Corp. will be monitoring the company's cost management strategies and the impact of the share repurchase program on its stock performance. The updated price target from RBC Capital provides a new reference point for market participants following the company.
In other recent news, Newmont Corporation reported third quarter results that did not meet analyst expectations. The company posted adjusted earnings per share of $0.81, falling short of the forecasted $0.85, and revenue of $4.61 billion, which was below the anticipated $4.67 billion. Despite the disappointing results, Newmont produced 1.67 million attributable gold ounces in the quarter, a 4% increase from the previous quarter, although costs remained high.
Newmont's CEO, Tom Palmer, noted that the company delivered 2.1 million gold equivalent ounces and generated $760 million in free cash flow. However, the higher costs and lower-than-expected revenue impacted the results negatively. Regardless, the company maintained its full-year 2024 production guidance, expecting to deliver 1.8 million attributable gold ounces in the fourth quarter.
Newmont continues to advance its divestment program, announcing agreements to sell assets in Ghana and Australia for up to $1.5 billion. The company aims to receive at least $2 billion in gross divestiture proceeds. Despite the earnings miss, Newmont declared a quarterly dividend of $0.25 per share and authorized an additional $2 billion share repurchase program over the next 24 months. These are recent developments in the company's operations.
InvestingPro Insights
Despite the recent challenges highlighted in RBC Capital's analysis, Newmont Corporation (NYSE:NEM) shows some promising signs according to InvestingPro data. The company's revenue growth is notable, with a 32.86% increase over the last twelve months as of Q2 2024, and an even more impressive 64.07% growth in quarterly revenue. This strong top-line performance aligns with the InvestingPro Tip that analysts anticipate sales growth in the current year.
Additionally, Newmont's stock has shown robust performance, with a 54.53% total return over the past year and a 51.22% return over the last six months. This strength is reflected in the InvestingPro Tip noting that the stock is trading near its 52-week high, with the current price at 98.33% of that peak.
However, investors should note that while revenue growth is strong, profitability remains a concern. The company was not profitable over the last twelve months, as indicated by another InvestingPro Tip. This aligns with the cost pressures mentioned in the RBC Capital analysis.
For those seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Newmont Corporation, providing a deeper understanding of the company's financial health and market position.
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