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What Wall Street Expects from Newmont after the Goldcorp Merger

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Analysts’ ratings

According to Thomson Reuters, of the 15 analysts covering Newmont Mining (NEM), 67.0% have given the stock a “buy” rating, 20.0% say “hold,” and 13% have a “sell” rating on the stock. Its target price implies a potential upside of 15.3% based on its current price of $34.9.

In the last three months, Newmont’s “buy” ratings have improved from 58% to the current 67%.

Analysts’ opinion

Newmont Mining (NEM) announced its merger with Goldcorp (GG) on January 14. As we discussed in Could the Newmont-Goldcorp Merger Form ‘The Go-To Gold Equity’? Newmont agreed to pay a 17% premium to acquire stock from Goldcorp (GG). Goldcorp has disappointed investors and analysts alike in 2018 by missing earnings expectations. Analysts are now looking forward to the completion of the company’s merger.

NEM’s focus on debt reduction and the strong execution of its project pipeline are the likely drivers of analysts’ positive outlook.

A wave of mergers and acquisitions is taking place in the gold sector (GDX)(NUGT) as economical reserves are dwindling. Barrick Gold (GOLD) completed its merger with Randgold Resources in January 2019.

Ratings changes

A lot of the future price action in NEM will depend on the post-merger project execution. The company will also need to assure markets that it can turn Goldcorp’s weaker assets around or sell them for a reasonable price.

Most of the obstacles for Newmont to merge with Goldcorp seem to be over. Check out Will Newmont Investors Approve GG Merger after Special Dividend? for details on the merger timelines and the recent developments.

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