5 Reasons BMO Upgrades Newmont Goldcorp

The bullish case for Newmont Goldcorp Corp NEM can now be made, according to BMO.

The Analyst

BMO Capital Markets analyst Andrew Kaip upgraded Newmont Goldcorp from Market Perform to Outperform with a price target lifted from $45 to $50.

The Thesis

Kaip's keys to warrant a bullish stance on the sole gold producer listed in the S&P 500 are as follows:

1. The company detailed a production profile to achieve a stable six to seven Moz over a multi-year time period.
2. Newmont Goldcorp is backed by a strong record of execution after delivering $2 billion in improvements since 2013 through the "Full Potential program." Incoming CEO Tom Palmer boasts the necessary experience to drive the Goldcorp assets to its full potential over the coming 24-36 months.
3. Management is overseeing a "deep pipeline" of opportunities, including the Tanami Expansion.
4. The company is targeting an internal rate of return north of 15% and further details are likely to be presented at the December investor day presentation.
5. Newmont Goldcorp's stock is trading at a discount to its peers including NPV5% at 1.2 times versus peers at 2.1 times. The risk-reward profile is "compelling" even if a shift to a bullish stance at this time proves to be premature.

Price Action

Shares of Newmont Goldcorp traded higher by 2% Wednesday at $38.90.

Related Links:

BMO Resumes Coverage On Gold Stocks: Bullish On Barrick, Neutral On Newmont

Morgan Stanley Prefers Newmont Mining Over Barrick Gold