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Lagging Cost-Controls Keep Newmont Mining At A Hold Rating From Argus

Lagging Cost-Controls Keep Newmont Mining At A Hold Rating From Argus - Newmont Mining Corporation NYSE:NEM

Argus has raised its EPS estimates on Newmont Mining Corp NEM 3.28% after solid second-quarter results. But, it kept its Hold rating on the stock, saying the company is "less well positioned" to benefit from future rise in gold prices as it lags most competitors in controlling costs.

Driven by higher gold prices as well as production, Newmont's reported second-quarter adjusted EPS from continuing operations of $0.44, which topped Argus estimate of $0.17 and the consensus forecast of $0.28. Revenue of $2.038 billion rose 7 percent from $1.908 billion a year earlier.

Analyst Bill Selesky raised his 2016 EPS estimate to $1.56 from $0.94, while the current consensus estimate is $1.60. Selesky also increased his 2017 EPS forecast to $1.77 from $1.43, with consensus being $1.85.

Colorado-based Newmont now anticipates 2016 gold production of 4.7–5.0 million ounces (down from a prior 4.8-5.3 million ounces) at an AISC of $870–$930 per ounce (down from $900–$960 per ounce). In 2016, the analyst expects gold to trade in a range of $945–$1,417 per ounce.

Copper production is now projected to be 40,000–60,000 tons (down from a prior estimate of 120,000-160,000 tons) at an AISC of $2.20–$2.40 per pound (up from a prior $1.50–$1.70).

Newmont shares trade at 26.1-times Argus' 2016 EPS estimate and 23.0-times 2017 estimate, compared to a wide 21-year historical average range of 31-79.

At time of writing, shares of Newmont were up 1.09 percent on the day, trading at $42.58.

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Jul 2016JefferiesMaintainsHold
Jun 2016JefferiesDowngradesBuyHold
May 2016Goldman SachsUpgradesNeutralBuy

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