Broker tips: Wheaton Precious Metals, CMC Markets, Coca-Cola HBC
By Iain Gilbert
Date: Monday 15 Aug 2022
(Sharecast News) - Analysts at Berenberg lowered their target price on Wheaton Precious Metals from 3,800.0p to 3,600.0p on Monday following a "mixed" second quarter for the group.
Berenberg said Wheaton's Q2 results saw the group deliver gold-equivalent-ounce production of 163,000 ounces, short of estimates of 189,000oz, split into 68,400 oz of gold and 6.5m oz of silver, with the remainder coming from other metals. Sales for the period were 170,000 oz GEO versus Berenberg's 181,000 oz estimate.
The German bank, which stood by its 'buy' rating on the stock, stated the lower production looked to have been driven by continued difficulties at Vale's Salobo mine in Brazil, where further maintenance was expected in H2, and by its Stillwater asset, where flooding affected operations.
Berenberg updated its model for the quarter and the updated guidance, leading to the trim in its estimates.
"Wheaton remains protected in terms of margins thanks to its defensive cost structure, which is not exposed to FX over-runs, or cost or capex inflation, due to the nature of its streams, meaning that the company is well placed to benefit from precious metal prices in the current inflationary environment," concluded the analysts.
Analysts at Canaccord Genuity lowered their target price on financial services group CMC Markets from 257.0p to 224.0p on Monday, citing "material cost inflation" flagged by the company.
Canaccord Genuity downgraded its adjusted diluted earnings per share forecasts by 25% in 2023 and 10% in 2024, stating it forecasts just 18% growth in net operating income over the next three years, versus CMC's communicated plan to increase net operating income by 30%.
"This leaves our FY25 net operating income forecast circa 10% below the company's target level," said the analysts.
The Canadian bank added that its adjusted dilute EPS forecasts were now 8%, 29%, and 33% below current consensus and said it believes its own forecasts could still be "too optimistic".
"We roll forward our target date to CY24 (prev: CY23), to take account of CMC's growth initiatives starting to bear fruit. We take CMC's average one-year forward P/E multiple since listing as our starting point, which is 12.2x. We now apply a 10% discount to this to reach a target multiple of 11.0x, which we believe is justified by the downside risk to our below-consensus forecasts," said Canaccord, which reiterated its 'sell' rating on the stock.
Analysts at Citi hailed Coca-Cola HBC's first half numbers on Monday, hiking their target price for the shares in the process.
However, Citi said the "limited" visibility on 2023 led it to keep its recommendation for the shares at 'neutral'.
The strong momentum reported in the company's three divisions was "impressive", vindicating management's confidence in CCH's portfolio and business model, as well as its ability to withstand a more difficult macro backdrop, they said.
Furthermore, management's new guidance left the shares on just 15.7 times' the shares' estimated price-to-earnings multiple for the calendar year 2023.
"However, with visibility on 2023 still limited and the upgrade supported by the full consolidation of Multon, we maintain our Neutral rating but increase our target price to £22.0 (from £18.25)."
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