Berenberg upgrades Fresnillo to 'buy' after FY results
Berenberg upgraded precious metals miner on Friday to 'buy' from 'hold' and lifted the price target 1,020p form 840p following full-year results earlier in the week.
The bank said the results showcased improving financials, underpinned by robust precious metals prices, operational stability, as well as better cost control that in its view underpins better visibility on shareholder returns.
"Further, following the announcement of a special dividend, and in light of a strong balance sheet, we think there is scope for additional one-off special dividends should silver and gold prices remain elevated," it said.
"With this should come a multiple re-rate, we believe."
Berenberg said 2024 volumes were in line to ahead of guidance, and in FY 2025 the company is guiding to stable volumes of attributable silver (including Silverstream) and attributable gold production of 49-56moz and 525- 580koz respectively.
Given ongoing cost controls, this will mean that margins will be well supported, which should in turn drive higher levels of profitability, Berenberg said.
It also said that management appears to be getting better at optimising its mine plans, offering upside potential, while exploration at brownfield sites in Mexico, including at Fresnillo, Herradura and San Julián, which are not in included in guidance, provide upside potential.
At 1010 GMT, the shares were up 2.7% at 861.33p.
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