Broker tips: Endeavour Mining, Glencore

8th Aug 2024 14:58

(Sharecast News) - Analysts at Berenberg lowered their target price on gold miner Endeavour Mining from 2,500.0p to 2,100.0p on Thursday as they rebased their estimates on the stock.

Berenberg, which has a 'buy' rating on the stock, said Endeavour Mining had endured a "challenging 2024" thus far, with shares down 11% year-to-date as a result of a combination of factors.

The German bank stated Endeavour's dismissal of its chief executive officer back in January for alleged misconduct brought headlines and fallout that have acted as "a sentiment overhang" on the stock.

Secondly, Berenberg also noted that Endeavour has faced some "operational headwinds", culminating in the company warning that it will miss guidance at its flagship Sabodala-Massawa mine in Senegal but keeping overall guidance intact thanks to a strong performance at its Ity mine in Cote d'Ivoire.

"We have rebased our estimates lower to reflect more conservatism, particularly on costs, but we think that our estimates - which sit well below consensus - are achievable and should be beatable. We had considered downgrading the shares, but we have faith in management's ability to deliver and are reassured by the forecast circa 20% free cash flow yield over 2025-26 and the circa 4.5% dividend yield," said the analysts.

Citi renewed coverage on Glencore with a 'buy' rating and 530.0p price target on Thursday, having previously suspended its coverage of the stock.

"One of the aspects that has kept us long-term buyers of Glencore is the combination of very cash-generative but considered 'yesteryear' commodities, like coal, and 'future-facing' commodities, like copper, zinc and nickel, which have a patchy cash-generation track record," Citi said.

"The introduction of EVR coking coal in the business is another cash flow and growth vector as: a) it is one of the most interesting commodities in the medium term; b) there are synergies with the seaborne coking coal business where Glencore is dominant; and c) the coking coal market is ripe for a 'roll-up play', and Glencore has successfully done this in other commodities."