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Analysts at Jefferies have revised their outlook for Australia's Northern Star Resources (ASX:NST), lowering the price target from AU$16 to AU$15. The brokerage has also downgraded the rating for the gold explorer from "buy" to "hold." This adjustment reflects concerns about the capital intensity involved in the company's ongoing projects, particularly the development of additional ore sources to support the expansion of the Kalgoorlie Consolidated Gold Mines (KCGM) mill.
Capex Forecast for FY25
On Thursday, Northern Star Resources announced a forecasted growth capital expenditure (capex) for FY25, ranging between AU$950 million ($621.87 million) and AU$1,020 million. Additionally, the company estimated the cost of the KCGM mill expansion to be between AU$500 million and AU$530 million. These substantial expenditures are aimed at increasing the mill's capacity and supporting long-term production goals.
Analysts' Opinions
The downgrade by Jefferies comes amid a mixed sentiment among analysts covering Northern Star Resources. According to LSEG data, ten out of sixteen analysts have a "buy" or higher rating on the stock, while six have rated it as "hold." The median price target among these analysts stands at AU$15.74, indicating cautious optimism about the company's future prospects.
Market Performance
Despite the cautious stance from Jefferies, Northern Star Resources' stock has shown resilience in the market, up 4.7% year-to-date as of the last close. This positive performance reflects investor confidence in the company's strategic initiatives and its potential for long-term growth in the gold mining sector.
While Jefferies' lowered price target and rating adjustment indicate concerns about the capital requirements for Northern Star Resources' expansion projects, the overall analyst consensus remains largely positive. Investors will be closely watching the company's execution of its growth plans and its ability to manage the associated costs.
