National Bank cuts Newmont stock rating on cost pressures By Investing.com

National Bank Financial downgraded Newmont to Sector Perform from Outperform and cut its price target to $130 from $140 after lowering 2026 commodity assumptions and raising cost estimates. The firm flagged near-term headwinds from higher costs and possible production disruption tied to a seismic event near Cadia, though it noted Newmont's strong valuation, elevated buybacks, and ongoing M&A appeal. Shares had already risen 72.5% since the prior upgrade, leaving the stock trading at 8.3x EV/EBITDA and 17.7x P/E.

Analysis

The setup is shifting from a “gold beta” trade to a more selective quality-vs-leverage trade. Newmont still screens as cheap on headline multiples, but the market is beginning to price in a less forgiving mix of higher sustaining costs, possible operational disruption, and a normalization in the commodity tape. That combination matters because when gold stops trending higher, miners with the cleanest cost curve and the least execution risk tend to take share of capital from names whose rerating depended on multiple expansion rather than visible production growth.

The bigger second-order effect is that Newmont’s buyback capacity and M&A optionality can become a floor under the stock, but also a ceiling on relative outperformance. If management leans into capital returns while operating risk rises, equity holders may get less downside than the downgrades imply, yet still underperform peers with stronger organic growth and less event risk. The Cadia-related headline also widens the discount on global operators with concentrated asset footprints, which should be supportive for diversified gold names and royalty/streaming models that have cleaner cash-flow visibility.

Near term, the catalyst path is asymmetric: gold price weakness and cost inflation can pressure sentiment over days to weeks, while any confirmation that production is insulated would stabilize the name over months. The contrarian miss in the market may be that consensus is treating this as a valuation call when it is really a quality-of-earnings call; a low PEG is less useful if the denominator is at risk from cost inflation and volume uncertainty. On the other hand, if gold reclaims its recent downtrend and rates roll over, NEM can rebound quickly because M&A optionality and buybacks amplify upside in a stronger tape.

Key Decisions for Investors

• Trim NEM on strength into any gold bounce over the next 1-2 weeks; upside is likely capped by execution risk unless commodity prices stabilize. Use it as a relative-value exit rather than an outright macro short.
• Prefer a pair trade: long FNV or WPM vs short NEM for 1-3 months. You get gold exposure with lower operational risk; if gold weakens, the short leg should outperform on downside capture, while the long leg carries cleaner cash-flow visibility.
• Sell NEM downside put spreads 1-2 months out only if gold confirms a base and Cadia risk is clarified. The buyback/M&A floor makes outright downside potentially contained, but the risk/reward is best expressed with defined risk.
• If maintaining a long gold basket, rotate away from single-asset operational risk and toward diversified producers/royalty names over the next quarter. This is a good time to reduce idiosyncratic exposure while the sector digests cost revisions.
• Watch for any follow-through in gold below recent support; if weakness persists for another 2-4 weeks, expect further estimate cuts across miners and use that as an entry point for a cleaner long later rather than averaging down now.