Kinross Gold Corporation (TSX:K) has earned a ‘Buy’ rating from UBS analysts in their initial coverage, along with a US$20 per share price target.
Shares of Kinross added almost 5% on the news, trading hands at US$18 on Tuesday afternoon.
"We remain constructive on gold, forecasting prices to remain elevated at $3,500 per ounce in 2026; Kinross offers attractive value versus senior gold peers and we believe accelerating cash returns will drive further re-rating,” the analysts wrote.
"Kinross has outperformed large-cap peers Agnico Eagle Mines Limited, Newmont Corporation, and Barrick Gold Corporation over the last two to three years resulting in a multiple re-rating off a lower base."
UBS highlighted that Kinross is well positioned to meet its 2025 guidance and expects its strong free cash flow yield, about 10% in 2025 compared with 5% to 7% for peers, to translate into higher returns to shareholders.
They said this should help Kinross’s valuation rise closer to that of Agnico Eagle and Newmont, trading at 6 to 8 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EBITDA), compared with Kinross’s current multiple of less than 5 times.
"In our view, the combination of positive earnings momentum driven by gold price upside and buybacks and re-rating towards peer multiples creates attractive risk versus reward,” UBS wrote.
They forecast that Kinross will become net cash positive by the second half of 2025 and expect capital spending to remain controlled at about $1.5 billion annually from 2028 to 2030, up from $1.15 billion in 2025. This should allow the company to build cash unless it pursues acquisitions, UBS wrote.
They highlighted that Kinross’s investment case would improve with a clear cash return policy tied to net debt targets or payout ratios based on free cash flow.
UBS estimated that at a gold price near $3,300 per ounce, Kinross could generate free cash flow equivalent to about 25% of its market value over the next three years.
If the company returns 70% of that free cash flow to shareholders through dividends and buybacks, UBS said Kinross could distribute roughly $3.5 billion, about 15% to 20% of its market capitalization, while maintaining over $1 billion in net cash to fund potential acquisitions.
They expect Kinross to sustain annual gold production around 2 million ounces through 2030, supported by existing projects and potential mine life extensions.
"We expect a decline in production at Tasiast and Paracatu, and depletion at La Coipa and Fort Knox to be essentially offset by construction of Great Bear and Lobo-Marte,” the analysts wrote.
"Beyond circa 2031, production will decline due to the depletion of Round Mountain and Bald Mountain; but in our view Kinross is likely to sustain higher production at Tasiast through underground development and additional laybacks and potential development of Curlew and Maricunga."