Newmont shares up as J.P. Morgan upgrades to 'overweight'

Investing.com -- Shares of Newmont Corporation climbed over 2% on Tuesday during pre-market trade after analysts at J.P. Morgan upgraded the stock’s rating to "overweight" from "neutral," citing updated guidance and positive catalysts, including asset sales. 

J.P. Morgan flagged that Newmont’s revised medium-term production target for gold and copper, coupled with recent progress at key operational sites, justified a more optimistic outlook.

The upgrade reflects adjustments to Newmont's valuation methodology and a revised price target of A$72.50, down slightly from a previous target of A$74.00. 

This valuation incorporated a blend of discounted cash flow (10%) and an earnings multiple model (90%), reflecting the preferences of the U.S. investor base, where the bulk of Newmont’s trading activity now resides.

The reassessment follows site visits to Newmont’s Australian operations at Tanami and Cadia, where major progress in expansion projects was observed. 

The Tanami Expansion 2 is on track for commissioning in the second half of 2027, with further exploration and efficiency upgrades underway. 

At Cadia, Newmont is focused on strengthening community and regulatory relationships to secure approval for the Cadia Continued Operations Project, which aims to extend the mine's life beyond 2050.

Additionally, the divestment of the Musselwhite mine for $810 million, exceeding expectations of $485 million, provided immediate financial uplift. 

J.P. Morgan noted that further asset sales expected by March 2025 could serve as short-term catalysts for the stock.

Despite a 20% reduction in the discounted cash flow valuation, J.P. Morgan emphasized the 12% upside potential in Newmont shares under the new framework, which is weighted heavily on the 1-year EV/EBITDA multiple.