Fresnillo PLC (LSE:FRES) has fallen behind its precious metals mining peers this year, and JP Morgan thinks the market has stopped paying attention at precisely the wrong moment.
The bank kept its 'overweight' rating and 4,700p target price after Wednesday's half-year results, implying roughly 70% upside.
Analyst Patrick Jones noted the Mexican precious metals miner has underperformed peers by 10% so far in 2026 and de-rated about 20% on spot enterprise value to earnings before interest, tax, depreciation and amortisation, taking the multiple down to around 6.3 times.
That follows a substantial re-rating through 2025.
The case for a recovery rests on two things. The first is a project pipeline JP Morgan describes as more compelling than it was, after operational improvements across 2024 and 2025.
Two brownfield developments, the Herradura Valles underground project and Noche Buena, should support gold output returning above 600,000 ounces a year over the medium term.
The Rodeo greenfield project could add a further 100,000 ounces beyond that.
The second is cash. The bank forecasts Fresnillo reaching about $2.4 billion of net cash by the end of this year, equivalent to roughly 9% of its market value.
It expects the full-year results in early 2027 to bring another special dividend well beyond the terms of the stated policy, taking the total distribution yield to around 10%.
That would be the highest in the EMEA mining sector.
JP Morgan trimmed its 2027 earnings forecast by 1% after updating for the results and adding the Noche Buena restart, leaving it 6% and 7% below Bloomberg consensus for this year and next.
The re-rating argument has a historical anchor: before 2018, Fresnillo traded on an average multiple of about 12 times.
