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(Sharecast News) - Analysts at Berenberg cut their target price on Fresnillo from 3,300p to 2,900p, saying the miner's longer‑dated growth profile and rising capital‑project demands warranted a more tempered valuation.
Berenberg, which kept its 'hold' rating on the stock, said Fresnillo's first‑half results were "somewhat light" versus its forecasts, particularly on revenue, while the $0.434 dividend fell short of the $0.60 consensus.
Although the market continues to focus on Fresnillo's sizeable net‑cash position as a potential source of additional returns, Berenberg took a more cautious stance, modelling a FY26 final dividend of $1.01 and FY27 dividend of $1.40 - behind consensus estimates of $1.37 and $1.86, respectively. It also argued that capital spending was set to ramp up over the next five years, likely prompting management to preserve cash rather than distribute it.
On growth, Berenberg said most meaningful volume uplift remains "longer‑dated", with its Valles Underground asset already incorporated into guidance and Noche Buena expected to restart in 2027 at 40,000 to 50,000 ounces per year. Larger projects such as Rodeo and Tajitos were seen as 2030 stories, while the newly acquired Novador asset in Canada was more likely to deliver first production around 2033. As a result, the German bank said it "cannot see enough in the volume story to get excited".
Following the H1 update, Berenberg made modest model adjustments and trimmed its enterprise value-to-underlying earnings multiple from 8x to 6x, driving the reduced target price. It added that it continues to prefer Endeavour Mining, highlighting its stronger forecast free‑cash‑flow yield and better dividend upside. Fresnillo shares, it noted, trade on 1.32x net asset value and 5.6x 2026E EBITDA.
Citi downgraded HSBC on Wednesday to 'neutral' from 'buy' and cut its price target on the stock to 1,570p from 1,640p, saying it expects the shares to pause for breath.
Citi noted that HSBC shares were up 40% year to date, making it one of the best performing stocks in the sector. They now trade on a roughly 11x forward price-to-earnings ratio and 2.2x price-to-tangible book value for an approximately 18% to 19% return on tangible equity.
"For a further re-rating from here we believe one needs to believe in a period of more rapid top-line growth and while there are some encouraging signs, we believe this will take time to materialise," Citi said.
"Meanwhile HSBC has guided to incremental cost spend near-term, which may limit the magnitude of positive jaws in 2027, and the renewed focus on volume growth may cap near-term buybacks."
As a result, Citi said it expects the shares to now pause for breath, hence the downgrade.
RBC Capital Markets downgraded Rotork on Wednesday to 'sector perform' from 'outperform' as it suggested that Swiss engineering firm ABB may be paying too little for the company.
"We believe ABB's offer for Rotork is taking advantage of the significant uplift in its multiple, while Rotork has (somewhat unfairly in our view) been derated," RBC said. "The 503p per share offer values Rotork at circa 4.1bn, implied EV/EBITA of 21x 2026E / 19x 2027E. This is near the upper end of the absolute range for Rotork since 2010, but the sector premium at 16% is only marginally above Rotork's average premium of 13% since 2010. And relative to ABB, the offer implies a circa 15% discount versus the average premium of 10% since 2010."
RBC noted that Rotork has derated significantly against the bank's sector coverage since 2024, but said it already saw this as harsh for what it views as a high quality business with very high shares in niches such as oil and gas explosion proof electric actuators.
The Canadian bank, which lifted its price target on the stock to 503p from 400p, said that given Rotork was "such a high quality and niche asset", it would expect other process automation companies to run a rule over it. "And with deal closure not expected until H1 2027 they have a bit of time," it said.
Rotork announced last month that it had agreed to be bought by ABB in a £4.1bn deal.
