Fresnillo PLC (LSE:FRES) has been downgraded UBS following a strong year-to-date share price increase.
The Swiss investment bank cut its rating on the Mexican precious metals miner to 'neutral' from 'buy' after the shares re-rated by over 170% in 2025, with its valuation on a 12-month forward EV/EBITDA basis rising from about 3.5x in January to roughly 7.5x.
UBS kept its 12-month price target remains unchanged at 1,500p as it highlighted that this exceeds the company’s five-year average of 6.1x and is approaching the 10-year average of around 8x.
Fresnillo’s growth pipeline appears limited, the broker noted. Projects such as Orisyvo and Rodeo are unlikely to see significant progress in the next two to three years. While M&A could be an option, UBS said opportunities are unclear and would likely remain focused on Latin America.
The miner maintains a base dividend policy of paying 50% of net income, and has returned surplus cash through special dividends in the past. UBS expects this to continue if capital expenditure remains constrained.
Valuations were based on gold and silver price assumptions of $3,500/oz and $39/oz, respectively.