City heavyweight JP Morgan Cazenove is backing iron ore pellet producer Ferrexpo (LON:FXPO), a move which it says is primarily based on the Company’s compelling valuation and diminishing balance sheet concerns.
JP Morgan explained: “Despite a significant increase in the share price over the last year (+720% since Jan’16), we believe the share price still does not capture the FCF momentum underpinned by the rally in iron ore prices and materially higher pellet premiums.
It added that the strong FCF generation also reduces refinancing risk and provides the financial capacity to reinstate a dividend.
Recommendation upgraded to overweight (from neutral), price target raised to 205 pence (from 105 pence).
Separately, Credit Suisse sees little by way of material near-term catalysts to warrant maintaining a positive rating on gold miner Randgold Resources (LON:RRS).
“Randgold had a challenging operational 2016 due to commissioning issues at Kibali and Tongon,” the Swiss bank said.
“While we do forecast a strong Q4, in our view the company will miss 2016 guidance on volumes and costs. In 2017 we forecast greater operational stability; however, we do not expect any other material catalysts over the medium term.”
Credit Suisse downgraded its investment rating on the mining giant to neutral (from outperform) and cut its target to 6,970 pence (from 9,200 pence).
Going online, Panmure Gordon has upped its rating on property portal Zoopla (LON:ZPLA) to hold (from sell) after refreshing its estimates ahead of an update, expected on Thursday.
Analyst Jonathan Helliwell said: “The near term risk from a weak UK property sector look to have dissipated, while the long term growth story remains impressive (we estimate EBITDA CAGR of 14% pa for the next five years, with several areas of potential upside to this estimate).”
Despite lifting its target price to 350 pence a share (from 265 pence), Panmure says that it is still not sure it’s a smart time to buy.
(LON:FXPO) Ferrexpo PLC share price was +7.65p at 151.65p
(LON:RRS) Randgold Resources Ltd share price was +132.5p at 6767.5p
(LON:ZPLA) Zoopla Property Group Plc share price was +0.8p at 368.8p
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