UBS: Production and cost risks coexist, downgrades NEM and Goldcorp

Zhitong Finance learned that UBS downgraded Newmont Mining (NEM.US) and Barrick Gold (GOLD.US) from Buy to Neutral, with target prices of US$54 and US$22, respectively.

Analysts led by Daniel Major at UBS said Newmont's Q3 results were very disappointing, with management implying that core production and costs would not improve by 2025, and lack of visibility on the medium-term outlook, which undermined confidence. UBS said the mid-term production and free cash flow forecasts were significantly cut, which affected Newmont's ability to deliver outstanding and sustainable cash returns relative to peers, while the expectation of further asset sales to some extent offset this, which would support near-term cash returns and benefit from the positive gold outlook.

Regarding Barrick Gold Corporation, UBS said the decline in production in 2024 and ongoing cost pressure combined to create downside risk to the company's previous 2025 production guidance, and upside risk to costs, which was not reflected in the current consensus.