JP Morgan has shifted its top pick among gold miners in Europe, the Middle East and Africa, replacing Fresnillo PLC (LSE:FRES) with AngloGold Ashanti (ASX:AGG).
Despite the shift, the American remains bullish on gold prices overall. Year-to-date the yellow metal is around 28%, while the mining stocks have performed even better, with Fresnillo among the top performers.
While JPM expects gold could climb above $4,000 an ounce by the second quarter of 2026, there are some company-specific concerns ahead of the second quarter results season.
For Fresnillo, the strengthening of the Mexican peso since April could increase costs, potentially leading management to raise cost guidance.
And there's a suspicion its valuation now offers limited upside compared with other stocks.
The stock now trades at an enterprise value to earnings before interest, tax, depreciation and amortisation ratio of more than seven times and a free cash flow yield of about 6%, compared with roughly 4.5 times and 9% a year ago.
In contrast, AngloGold’s valuation looks more attractive, with low net debt to EBITDA and a free cash flow yield near 10%.
JPM has therefore placed AngloGold on what it calls 'positive catalyst watch' ahead of its half-year results in August, increased its price targets and made it its top pick, replacing Fresnillo.
It also maintains an 'overweight' stance on Hochschild Mining but lowered its price target due to near-term production and cost issues at the Mara Rosa mine, though it still sees about 30% upside.
The bank has adjusted its gold price forecasts slightly to $3,300 per ounce in 2025 and around $3,600 in 2026 based on the latest market data.
Fresnillo shares were off 3.5%, reflecting a weaker silver price (which is off 1.7% on Tuesday after a stellar run) and some minor profit-taking.