Newmont Stock Advances Pre-Market Alongside Miners as Gold Prices Surge Despite Bearish Rating: Retail Undecided

Shares of Newmont Corporation ($NEM), the world’s largest gold producer, climbed up to 1% in pre-market trading Friday, supported by rising gold prices amid a weaker dollar and persistent geopolitical tensions, even as CLSA initiated coverage with a bearish outlook.

The brokerage assigned an ‘Underperform’ rating to the stock, setting a price target of $56.85.

Shares of its peers Barrick Gold Corp. ($GOLD), Agnico Eagle Mines Ltd. ($AEM), Kinross Gold Crop. ($KGC) and Harmony Gold Mining Co. Ltd. ($HMY) were also up at least 1% in pre-market trading as spot gold climbed 0.7% to $2,659.98 per ounce.

Bravos Research highlighted that U.S. government bonds broke below a 40-year uptrend on Thursday, underscoring a significant shift in market dynamics. It noted that gold has outperformed bonds by over 100% since March 2020, driven by surging government spending.

The research firm forecasts treasury bond issuance to reach $1.9 trillion this year, surpassing levels seen during the peak of the 2008 financial crisis. 

Bravos expects gold prices to climb further, citing the potential onset of the "U.S. government debt market collapse."

Newmont Corporation Sentiment and Message Volume on Nov 29 as of 7:50 a.m. ET | Source: Stocktwits

On Stocktwits, retail sentiment around the stock slid to ‘neutral’ (52/100) from ‘bullish’ a day ago and chatter continued its drop in the ‘low’ (39/100) territory, edging towards year-lows. 

There has been an 80% drop in message count on the platform and watcher growth has stagnated at 0.5% over the past month, according to Stocktwits data.

Newmont’s stock price movement this year so far. | Source: TradingView

Newmont’s stock experienced its steepest drop in over two years following its Q3 earnings report, according to Bloomberg. Despite posting its highest quarterly profit in five years at $4.6 billion, an 85% year-over-year (YoY) increase, results fell short of analysts’ expectations on earnings, revenue, and costs. 

Operating earnings quadrupled, and year-to-date free cash flow tripled, but rising expenses overshadowed these gains.

Wall Street reacted with downgrades, including UBS cutting its rating from 'Buy' to 'Neutral' and lowering its price target to $54 from $67, citing disappointing results and medium-term concerns.

Gold miners have faced rising labor and energy costs in recent years. Newmont reported a 10% increase in capital expenses due to expansion projects in Australia and Argentina. Costs also surged at assets acquired in its $15 billion Newcrest Mining takeover, with all-in sustaining costs at the Lihir operation in Papua New Guinea rising 55% in Q3.

The company recently sold its Éléonore mine in Quebec for $850 million as a part of its broader divestiture strategy aimed at optimizing its portfolio by offloading non-core assets. 

Newmont’s shares have only gained 4% this year so far, while SPDR Gold Trust ($GLD) has gained over 27%. 

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