Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) shares were downgraded by UBS on Wednesday due to a lack of near-term production growth and lingering operational risks, and following a strong share price performance.
The FTSE 250-listed precious metals miner has rallied roughly 130% in 2025, buoyed by rising gold and silver prices.
But the Swiss bank, which lowered its rating to 'neutral' from 'buy', said that momentum may stall in 2026, as Hochschild faces flat group production, elevated costs, and uncertainty around project execution.
"Stock-specific headwinds have been more than offset by commodity price strength,” UBS analysts wrote.
"But with execution challenges at Mara Rosa and permitting delays in Peru, we believe the market will require visible progress before assigning value to the company’s growth projects."
Hochschild is expected to generate solid free cash flow next year, but UBS sees little chance of increased shareholder returns, noting the company is likely to prioritise balance sheet repair over dividend hikes.
The group pays out 20-30% of FCF, which translates to a base yield of around 3%.
UBS lifted its price target to 480p from 460p, versus the last close at 466.6p, saying the risk/reward is now balanced.