Credit Suisse raises Acacia Mining's target price and earnings forecast
By Renae Dyer
Date: Friday 13 May 2016
(ShareCast News) - Acacia Mining's shares rose as Credit Suisse (CS) raised its target price to 380p from 300p and reiterated an 'outperform' rating on the stock.
CS said Acacia is trading at a low multiple and a discount to the broker's net present value.
"We think this is an opportunity to buy a cash generative gold stock with a strong balance sheet and rerating catalysts in 2016," CS analysts said.
"What we think the market has underappreciated is the cost reductions delivered to date and resultant margin improvement set for 2016."
The company's all-in sustaining costs is below $1,000 per ounces, the analysts noted.
As a result CS raised its forecast on earnings before interest, tax, depreciation and amortisation (EBITDA) margins to rise to 38% from 20%. The broker also expects peer leading free cash flow (FCF) yields over the next two years of 12% and a net cash balance of more than 20% of the current market capitalisation by the end of next year.
"In a blue sky scenario where the company delivers on its targets and Acacia rerates towards its global peers we see an upside valuation of £4.50 (implied 2017 FCF yield of around 8.5% versus 12% currently)."
Shares rose 1.83% to 333.50p at 0950 BST.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN