Barclays upgrades Hochschild Mining after selloff
Hochschild Mining
158.40p
16:34 26/04/24
Barclays upgraded its stance on Hochschild Mining on Wednesday to ‘overweight’ from ‘equalweight’, arguing that this week’s selloff presents a value opportunity.
FTSE 250
19,824.16
16:59 26/04/24
FTSE 350
4,470.09
16:59 26/04/24
FTSE All-Share
4,423.59
17:14 26/04/24
Mining
10,486.86
16:59 26/04/24
Shares in the gold miner tanked on Tuesday after Hochschild said it would fight plans by the Peruvian government to shut its mines there on environmental grounds.
Barclays said: "The selloff in the shares this week in response to the threat of mine closures presents a significant value opportunity, in our view.
"While we cannot completely rule out risks of mines being shut (downside scenario delivers -61% to 45p/share), we believe the subsequent softening of the Peruvian government's tone suggests the around 60% valuation discount versus peers on P/NPV and 2022E EV/EBITDA presents a significant risk-reward opportunity."
The bank also highlighted "significant" further upside potential from Inmaculada reserve upgrades, a value unlock from the Aclara demerger and upside risks to precious metals pricing.
Barclays cut its price target to 165p from 185p.