Newmont Corporation (NYSE:NEM, TSX:NGT, ASX:NEM, ETR:NMM) delivered a very strong quarter, according to analysts at Jefferies who raised their price target on the stock citing beats across production, earnings and free cash flow.
The analysts raised their price target to $73 from $68, implying upside of 19% from current levels.
The second-quarter results were marked by a surge in free cash flow and strong operational performance, they highlighted.
“Second-quarter free cash flow was $1.7 billion versus $664 million Jefferies estimate and $732 million consensus, and benefited from pushing out capital expenditures to the second half and from better-than-expected working capital movements,” Jefferies wrote.
“We calculate free cash flow of $1.71 billion, above our estimate of $664 million and consensus of $732 million.”
Production also came in well above expectations. Production was 1.48 million ounces versus their estimate of 1.33 million ounces and the Street consensus of 1.39 million ounces. Jefferies attributed the beat to better-than-expected production at Ahafo, Penasquito, Yanacocha, and Cadia.
On the earnings side, Newmont’s adjusted EPS of $1.44 significantly exceeded Jefferies' estimate of $1.25 and the consensus of $1.16.
“Adjusted EBITDA of $2.997 billion beat our estimate of $2.660 billion and consensus of $2.639 billion,” they noted. Gross profit of $2.696 billion also topped Jefferies' forecast of $2.196 billion.
Cash performance was another bright spot, with cash costs of $1,215 per ounce beating the analysts’ estimate of $1,251.
“All-in sustaining costs of $1,593 per ounce were well below our $1,777 per ounce estimate on lower sustaining capital expenditures, which were deferred to the second half,” Jefferies added.
The firm also highlighted the company’s strong liquidity position and capital returns. The company ended the quarter with $6.185 billion in cash and $7.132 billion in debt after reducing debt by $372 million since April 23.
Further, it introduced a new $3 billion share buyback program after nearly exhausting its earlier $3 billion program.
Despite Newmont maintaining its 2025 guidance, Jefferies wrote it expects a positive reaction in the share price.
Shares of Newmont moved 5.7% higher to about $65 in the early afternoon on Friday.