Citi Global Gold: Newmont Model Update; Maintains Buy and Raises Target Price on Solid FCF Yield
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Citi has updated its financial model for Newmont (NEM) to reflect the company's latest operational guidance and Citi's revised commodity price forecasts. The bank maintains a neutral outlook on gold prices, forecasting an average price of $3,925 per ounce for 2026.
Operationally, Newmont's attributable production for 2025 is projected to land near the midpoint of its 5.9 million-ounce guidance, with fourth-quarter output reaching approximately 1.4 million ounces. Cash costs are guided at $1,260 per ounce. However, higher gold prices are expected to push costs up by an additional $30 to $40 per ounce due to increased royalty fees. Looking into 2026, implied production guidance sits around 4.2 million ounces (plus or minus 5%), which excludes a 60,000-ounce reduction in the first quarter caused by wildfires at Boddington.
Despite the anticipated year-over-year production decline at several key mines, Newmont continues to generate robust financial returns. Citi highlights a solid free cash flow yield of roughly 5% to 6%, positioning the company favorably within the current commodity cycle. Consequently, Citi raised its 2026 and 2027 EBITDA forecasts by 26% and 47%, respectively, driven by a 21% and 25% increase in gold price assumptions. The bank maintains a Buy rating, raising its target price to $118 per share for NEM and A$177 per share for NEM.AX, based on 1.8 times price-to-net-asset-value.