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Acacia Mining is good opportunity for investors – Credit Suisse

Published: 10:25 13 May 2016 BST

Pictured is a load of gold bars

Acacia Mining PLC (LON:ACAA) gets a boost after heavyweight broker Credit Suisse repeated an 'outperform' rating on the share and lifted the target price to 380p from 300p.

The current price of the mining share is 333p - up 1.68% on the day.

"Many investors are uncomfortable with the premium multiples that many global gold companies trade on. Acacia is an exception, trading at a low multiple and a discount to our NPV due to its limited track record and a major shareholder overhang," notes analyst Conor Rowley.

Barrick holds a large 64% stake in the Africa- focused miner, which it describes as non-core meaning a partial or full sale is possible in 2016/17, notes Rowley. It sold 10% in 2014.

However, he added: "Barrick is unlikely in our view to sell down another small portion as this would be insufficient in size to achieve the debt reduction it seeks.

"A large stake sale into the market or to a strategic investor could ultimately be positive for the shares as it would increase the freefloat and liquidity and could make Acacia a take-out candidate."

"We think this is an opportunity to buy a cash generative gold stock with a strong balance sheet and re-rating catalysts in 2016.

"What we think the market has underappreciated is the cost reductions delivered to date and resultant margin improvement set for 2016."

US broker Jefferies rates support services group DCC Plc (LON:DCC)  a 'buy' and has pumped up the price target to 7,100p from 6,100p previously.

The firm releases full year 2016 numbers next Tuesday and the broker is expecting 31% operating growth for 2016 to £300mln with 21% full year EPS growth to 254p.

"We remain confident in DCC’s differentiated strategy of organic expansion (particularly in Healthcare), with virtually debt free balance sheet supporting accretive Energy, Technology & Healthcare M&A," it says.

Elsewhere, broadcaster ITV PLC (LON:ITV) receives downgrades from Deutsche and Citi today, the latter reducing the target by 20p to 260p from 280p but repeating a 'buy'. Deutsche, meanwhile, repeats a 'sell' and lowers the target to 185p from 200p.

ITV shares fell yesterday as it posted higher first-half profits but highlighted advertising market uncertainty caused by the forthcoming EU referendum.

Also on the downgrade front today, is the Capita  Group PLC (LON:CPI) as Credit Suisse repeats an 'outperform' stance but drops the price target to  1250p from 1350p.

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