dollar down gold up ncm not moving , page-3

Broker Recommendations for NCM
Macquarie 17-Feb-14
Newcrest Mining's FY13/14 first-half earnings slightly outpaced the broker's estimates but cash flow missed the forecast. Macquarie expects cash flow will weaken further in the second half and notes higher net debt drove a rise in gearing.

Given the downgrade in resources and reserves (7% and 11%), concerns about cash generation, and unchanged guidance (the company is on track to meet the upper end), the broker maintains its Neutral rating.

But the target price rises to $10.50 from $9.50 and and FY14 earnings per share forecasts rise to 51c from 38c, to reflect the strong interim result. Macquarie says the rally in the gold price augurs well.

Neutral
Citi 17-Feb-14
Newcrest expects positive free cash flow in FY14 but Citi thinks this will be difficult to obtain. Staff and capex are already heavily reduced and operational capacity and reliability is expected to be under pressure. Future operating plans are also highly sensitive to near-term gold prices.

The broker thinks the company will be focused on getting gearing down from current levels. The Sell rating and $9.00 price target are maintained.

Sell
BA-Merrill Lynch 17-Feb-14
Merrills has made changes to life-of-mine forecasts following the first half result, taking into account the new reserves. Earnings forecasts are upgraded 22% for FY15. Underlying profit was in line with the broker's expectations but free cash flow was significantly weaker.

The price target is raised to $11.20 from $10.00 and the Neutral rating is retained.

Neutral
JP Morgan 17-Feb-14
Newcrest's result came in below the broker but there were various one-off impacts and otherwise no real surprises. Cash flow was weaker than expected but the broker still expects this to improve. The broker was not surprised 9moz of reserves at Lihir/Telfer were reclassified back to resources given the high cost base of these assets, and Cadia Valley reserves were increased by 1moz.

Overweight and $12 target retained.

Overweight
UBS 17-Feb-14
Interim profit of $207m was in line with the broker's forecasts. The annual resource/reserve update showed higher costs were lifting cut-off grades, leading to an 11% decrease in reserves. Gold price assumptions were unchanged.

UBS maintains a Neutral view on valuation but recognises the stock offers substantial leverage because of its high costs and gearing. Still, for the broker there are many unanswered questions. Production forecasts beyond FY14 for Lihir are very unclear, in the broker's view, and this mine accounts for 37% of reserves and 35% of output.

The Neutral rating is retained as is the $10.80 price target.

Neutral
Credit Suisse 17-Feb-14
Newcrest Mining's first-half result was "spot-on" says Credit Suisse.

The broker expects an cash flow will outpace capital expenditure in the second half (expenditure triggering a debt draw in the first half) but notes no change to production guidance or strategy.

Underperform rating retained and target price rises to $8.20.

Underperform