Broker tips: Hochschild, Fresnillo, Synthomer
By Iain Gilbert
Date: Thursday 13 Mar 2025
(Sharecast News) - 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 its target price was increased to 270.0p from 260.0p.
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, as it noted Hochschild was its preferred exposure in the precious metals space.
As far as Fresnillo was concerned, RBC downgraded the stock to 'sector perform' from 'outperform' and lifted its price target to on the stock to 880.0p from 810.0p.
The Canadian bank 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 admitted, but added that it sees better risk-reward in other silver companies.
Analysts at Berenberg downgraded speciality chemicals firm Synthomer from 'buy' to 'hold' on Thursday and cut its target price on the stock from 230.0p to 150.0p, stating the "margin of safety" was now "too thin".
Berenberg said downgrading its recommendation for Synthomer at the trough of its earnings cycle was "disheartening", but noted that the alternative was potentially worse.
"Waiting through a prolonged trough during which even minor additional cuts to earnings forecasts could move leverage from uncomfortable to precarious," said Berenberg.
The German bank stated the main factors that could have significantly improved the margin of safety were, in its view, a quick recovery in nitrile latex and divestments. However, it said neither seems as compelling as a few months ago.
"The circa 5% cuts to our adjusted EBITDA estimates for 2025/26 primarily reflect lower margins in nitrile latex and more subdued performance in the energy business. Our 2025 EBITDA estimates are circa 8% below Bloomberg consensus," added Berenebrg.
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