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Investing.com - Hochschild Mining Plc. (LON:HOC) stock rating was reiterated as Outperform by BMO Capital on Thursday, maintaining a price target of GBP3.00 despite production guidance cuts. The stock, which has delivered an impressive 65.1% return over the past year according to InvestingPro data, appears undervalued based on comprehensive Fair Value analysis.
The mining company, currently valued at $1.91 billion, reported first-half earnings per share of $0.18, exceeding both BMO and consensus estimates of $0.13. Adjusted EBITDA reached $224 million, broadly in line with BMO’s expectation of $232 million and the consensus forecast of $220 million. InvestingPro subscribers can access detailed financial health metrics, which currently show a GREAT overall score for Hochschild.
First-half all-in sustaining costs (AISC) came in at $1,914 per gold equivalent ounce, slightly above BMO’s projection of $1,835 per ounce. The solid earnings performance, however, was overshadowed by significant revisions to the Mara Rosa mine’s production outlook.
Hochschild dramatically reduced Mara Rosa’s production guidance by 60% to 35,000-45,000 ounces, falling well below BMO’s forecast of 56,000 ounces. The mine’s revised AISC guidance of $3,400-3,800 per ounce substantially exceeds BMO’s previous estimate of $1,966 per ounce.
As a result of the Mara Rosa setback, Hochschild’s company-wide production guidance decreased by 16% to 291,000-319,000 ounces, while overall AISC guidance increased by 24% to $1,980-2,080 per ounce.
In other recent news, Hochschild Mining Plc. has been the subject of analyst attention with varying perspectives. Scotiabank initiated coverage on the company with a Sector Outperform rating and set a price target of GBP3.50. The bank highlighted Hochschild’s strong growth profile in the precious metals mining sector, projecting a production expansion at a compound annual growth rate of 10.7% from 2023 to 2028. This growth rate is notably higher than the peer average of 4.8% on a gold-equivalent basis. Meanwhile, BMO Capital reiterated its Outperform rating with a GBP3.00 price target despite production challenges at Hochschild’s Mara Rosa mine. The company reported that Mara Rosa produced approximately 25,000 ounces through the end of May, which is only about 27% of the low end of its guidance range of 94,000-104,000 ounces after five months of operation. These developments reflect the mixed outlook from analysts regarding Hochschild’s production capabilities and growth potential.
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