UBS has nudged Fresnillo Plc's (LSE:FRES) price target down to 4,000p as the broker weighs a punchy jump in shareholder returns against a looming shift toward heavier growth spending.
The bank's analysts, in a note, said FY25 results beat expectations, helped by stronger profitability and cash generation, and highlighted a net cash position of about $1.9bn.
That balance-sheet strength underpinned a higher dividend payout ratio for 2025 and roughly $950m of cash returns, even as the stock’s surge over the past two years leaves the yield looking modest in absolute terms.
Where UBS turns more cautious is on the medium-term mix. Fresnillo has flagged a long list of organic options, supplemented by the Probe Gold acquisition, and pointed to the potential for around $3bn of project capex over five years, on top of sustaining spend.
UBS is reluctant to bake those projects into forecasts until they are permitted and approved, but argues that if momentum builds, capex could rise meaningfully, potentially constraining cash returns beyond the next year or two.
With the shares now viewed as fairly valued on UBS’s metrics, the broker sticks with a Neutral rating.