JP Morgan is optimistic about Newmont Mining (NEM.US) production guidance and asset sales plan, and has upgraded its rating to "Buy".

Morgan Stanley analysts have upgraded their rating on Newmont Mining (NEM.US) stock from "neutral" to "hold," citing the company's updated production guidance and positive asset sale plans as key catalysts for the upgrade. The analysts believe that Newmont Mining's revised medium-term gold and copper production targets, as well as recent developments at its key operations, indicate a more optimistic outlook. Specifically, Morgan Stanley stated that the rating upgrade reflects adjustments to Newmont Mining's valuation methodology and a revised target price of 72.50 Australian dollars, slightly below the previous 74.00 Australian dollars. This valuation combines discounted cash flow (10%) and price/earnings models (90%), reflecting the preferences of U.S. investors as most of Newmont Mining's trading activities are in the U.S. Morgan Stanley's reassessment of Newmont Mining was conducted after on-site visits to the company's Australian operations in Tannami and Cadia. In Tannami, the expansion of the Phase 2 project is expected to be operational in the second half of 2027, with exploration and efficiency upgrades currently underway. Meanwhile, at Cadia, Newmont Mining is working to strengthen community and regulatory relations to secure approvals for continued operations extending beyond 2050. Additionally, Morgan Stanley noted that Newmont Mining has set new medium-term production targets of 6 million ounces of gold and 150,000 tonnes of copper per year. They specifically mentioned that production expectations for the Lihir and Brucejack projects in the 2025 fiscal year have been revised downward, implying potential production cuts in other parts of the company. Furthermore, the divestiture transaction of the Marcelo White mine has yielded significant results for Newmont Mining, with a transaction value of $8.1 billion, far exceeding the expected $4.85 billion and providing an immediate financial boost for the company. Morgan Stanley expects Newmont Mining to further divest assets by March 2025, which could serve as a short-term catalyst for the stock. Despite a 20% decrease in discounted cash flow valuation, Morgan Stanley highlights that under the new valuation framework, Newmont Mining still has a 12% potential for upside. The realization of this potential will largely depend on the 1-year EV/EBITDA multiple. Overall, Morgan Stanley's positive outlook and rating upgrade for Newmont Mining reflect their confidence in the company's future performance and growth potential. As of Tuesday's close, Newmont Mining's stock price rose nearly 2% to $43.18.