From Staff Reports
Analysts at UBS AG (UBS) have maintained their "Buy" rating and lifted their target price on the shares of Newmont Mining Corp. (NEM), one of the gold-mining plays recently recommended by Martin Hutchinson, Money Morning's director of global investing research.
In the Oct. 25 Money Morning story "Five Ways to Profit From The Gold Boom," Hutchinson reviewed 12 global gold stocks, as well as an exchange-traded fund. He listed the Denver-based Newmont as one of the five best global gold stocks that investors should study further. He also listed the ETF – the StreetTracks Gold Shares Trust (GLD), which invests in gold directly – as a good bet. [To read that Money Morning Research Report, please click here. The report is free of charge].
In the research note released late last week, UBS reiterated its "Buy" recommendation on Newmont's shares, and boosted its target price from $60 a share to $62. Newmont's shares closed yesterday at $52.34. They have traded between $38.01 and $54.52 in the last 52 weeks.
The UBS analysts stated that Newmont has posted impressive third-quarter results, with adjusted earnings per share that were ahead of consensus estimates. Newmont has also tightened its equity gold sales guidance for this year from a range of 5.2-5.6 million ounces to 5.2-5.4 million ounces, and raised its costs applicable to sales guidance from a range of $375-$400 an ounce to new guidance of $400-$430 an ounce, UBS analysts said.
UBS said the EPS estimates have been raised for both this year and next. For 2007, the EPS estimates were boosted from $1.05 to $1.14. And for 2008, UBS said the EPS estimates were raised from $2.13 to $2.16. The increases were made to reflect revisions in the estimates for depreciation, general and administrative expenses, production and guidance on tax rates.
Since August, gold prices have soared from $650 an ounce to its current price in the neighborhood of roughly $800 – a gain of nearly 25%.
"Our gold call is currently looking quite smart, which is always nice," said Hutchinson, an investment banker with more than 25 years' experience, and a leading expert on the international financial markets. "I think there's further to run, though."
In midday trading today (Tuesday), gold was trading at $825.70 an ounce, up $15.
And some experts believe that gold prices – driven by spiraling demand from China and other emerging markets in Asia and Eastern Europe – could easily reach $2,000 an ounce in the next few years.
Money Morning has prepared a new report on additional profit opportunities in the gold market. It will appear in our free daily communiqué before the end of this week.
[To sign up for Money Morning, a free global investing news service that will be sent to you via e-mail each morning, please click here. As an added benefit, if you sign up now, you'll also receive our 6,000-word research report, "." That report, too, is free of charge. to subscribe].
News and Related Story Links:
Newmont Mining "Buy," Target Price Raised.
- Money Morning Investing Research Report:
The Five Ways to Profit From the Pending Gold Bubble (Part I)
- Money Morning Investment Research Report:
Five Ways to Profit From the Gold Boom (Part II).
- Money Morning Investment Analysis:
The Baywatch Effect: Can China's Growth Help Gold Prices Triple?