Broker tips: Polymetal, Admiral
Analysts at Berenberg raised their target price on precious metals miner Polymetal from 1,840p to 2,200p on Thursday after the group's first-half results came in line with expectations.
With earnings per share of $0.81 and a dividend of $0.40, Berenberg said higher production at the group's Kyzyl mine had offset guided declines at Svetloye and Voro and also highlighted that group cash costs were a beat at $638.0 an ounce as costs were positively affected by the weaker rouble and tenge.
Berenberg anticipates that Polymetal's interim dividend will remain at 50% of underlying net income, replacing its previous policy of paying a special dividend.
However, the German bank did note that the currency effect was partially offset by domestic inflation, Covid-19 costs and higher mining taxes.
Berenberg, which transferred coverage to Jonathan Guy, stated Polymetal was its preferred larger-cap London-listed gold stock, pointing to the firm's "solid track record for operational delivery" and its peer-group-leading level of distribution.
"Covid-19 has had no material impact on the company’s operations," stated Berenberg, which reiterated its 'buy' rating on the stock.
Over at RBC Capital Markets, analysts upped their target price on insurer Admiral Group from 2,100.0p to 2,400.0p on Thursday following the firm's interim results.
RBC Capital said Admiral's first-half results had led it to increase its earnings estimates for 2020 by 15%, with its 2021-22 estimates also increasing by an average of 10%.
The Canadian bank said the moves were largely driven by higher reserve releases and had resulted in a 9% increase to both its 2020-22 book value per share and dividend estimates.
RBC said risks to its thesis included higher reserve releases, signs of earlier-than-expected profitability in the group's international insurance and price comparison operations and higher-than-expected claims inflation eroding profitability in Admiral's UK motor business.
"In the upside scenario, we assume that Admiral achieves growth of 20% in its UK business with no reduction in other revenue per vehicle. In addition, we factor in a sharp turnaround in the International operations with it achieving break-even from 2018," added the analysts, which also maintained their 'sector perform' rating on the stock.