RBC Capital upgrades Hochschild, downgrades Fresnillo

RBC Capital Markets upgraded Hochschild but downgraded Fresnillo on Thursday as it took a look at European miners, revising its commodity price assumptions.
Hochschild was lifted to 'outperform' from 'sector perform' and the target price increased to 270p from 260p.

RBC noted that Hochschild has underperformed gold and silver miners by 20% year to date, making it the most inexpensive silver company in its coverage.

"Although we think the path to outperformance will be harder this year, we see risk reward levels as attractive following the rebasement in the group valuation and consensus forecasts and we upgrade our rating," it said.

RBC said Hochschild is its preferred exposure in the precious metals space.

"We expect precious metals equities to have a strong 2025 driven by a combination of higher production and commodity prices. We expect Hochschild Mining...to re-rate as the company delivers on 2025 guidance while the potential for an Argentinean devaluation and cost measures create potential for positive surprises, specially given recent underperformance versus peers."

The bank downgraded Fresnillo to 'sector perform' from 'outperform' and lifted the price target to 880p from 810p.

It noted that Fresnillo has outperformed silver peers by 20% year to date, helped by strong price/operational momentum and the weakening of the Mexican Peso.

"We see potential for further rerating as margins expand in the coming two years but see upside more limited following recent outperformance," it said.

"We see better risk reward in other silver companies in our coverage including Coeur Mining (CDE US), Hochschild Mining (HOC LN) and Pan American Silver (PAAS US) and downgrade our rating."