Berenberg lowers target price on Fresnillo following H1 results

(Sharecast News) - Analysts at Berenberg cut their target price on Fresnillo from 3,300p to 2,900p, saying the miner's longerdated growth profile and rising capitalproject demands warranted a more tempered valuation.

Berenberg, which kept its 'hold' rating on the stock, said Fresnillo's firsthalf results were "somewhat light" versus its forecasts, particularly on revenue, while the $0.434 dividend fell short of the $0.60 consensus.

Although the market continues to focus on Fresnillo's sizeable netcash position as a potential source of additional returns, Berenberg took a more cautious stance, modelling a FY26 final dividend of $1.01 and FY27 dividend of $1.40 - behind consensus estimates of $1.37 and $1.86, respectively. It also argued that capital spending was set to ramp up over the next five years, likely prompting management to preserve cash rather than distribute it.

On growth, Berenberg said most meaningful volume uplift remains "longerdated", with its Valles Underground asset already incorporated into guidance and Noche Buena expected to restart in 2027 at 40,000 to 50,000 ounces per year. Larger projects such as Rodeo and Tajitos were seen as 2030 stories, while the newly acquired Novador asset in Canada was more likely to deliver first production around 2033. As a result, the German bank said it "cannot see enough in the volume story to get excited".

Following the H1 update, Berenberg made modest model adjustments and trimmed its enterprise value-to-underlying earnings multiple from 8x to 6x, driving the reduced target price. It added that it continues to prefer Endeavour Mining, highlighting its stronger forecast freecashflow yield and better dividend upside. Fresnillo shares, it noted, trade on 1.32x net asset value and 5.6x 2026E EBITDA.