Morgan Stanley Initiates Newmont Mining At Equal-Weight, Says Co. Remains Successful On Cost Cutting

While Newmont Mining Corp NEM has been taking steps to lower debt and reduce costs, the market seems to have already rewarded these actions, Morgan Stanley’s Evan L Kurtz said in a report. He initiated coverage of the company with an Equal-weight rating and a price target of $41.

Management has generated proceeds of ~$2 billion from the sale of non-core assets over the past three years. While lowering its net debt, Newmont Mining has been investing in profitable brownfield growth and inorganic opportunities, analyst Evan Kurtz mentioned. He added that the company has also been “successful in cutting costs.”

The company has only one large greenfield project in its portfolio. The beginning of construction of this greenfield project may be considered negatively by investors, given social opposition in Conga.

Shares Surge

Newmont Mining’s stock outperformed that of its peers in 2015. Shares have climbed about 150 percent year-to-date, and following the run-up, the stock appears fairly valued, Kurtz stated.

Potential Catalysts

The analyst enumerated the potential catalysts for Newmont Mining’s stock as:

• Clarity on longer term production profile and strategy
• Decision on Ahafo mill expansion and Subika underground projects in late 2016

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