European miners are “rockin’, but not yet rollin’”, according to an upbeat assessment of the sector by Deustche Bank.
Up 74% in the year to date, there is still further for the diggers to go, Deutsche’s analysts reckon.
It has upgraded its price forecasts for stocks by an average 6% in comprehensive assessment of the industry.
It bases its positive stance on the sector’s ability to generate free cash flow. The free cash flow yield will be a solid 8% this year, rising to 13% next.
“The outlook for commodity demand remains fragile for 2017 but the miners’ self-help efforts continue, and should drive improving free cash flow regardless,” Deutsche said in a note clients.
It is a ‘buyer’ of Rio Tinto PLC (RIO), Ferrexpo (LON:FXPO), Vedanta (LON:VED) and Acacia (LON:ACA) and has ‘sells’ on Fresnillo PLC (LON:FRES) and Lonmin (LON:LMI).
In the same not it resumed coverage of Anglo American PLC (LON:AAL) with a hold recommendation and £9.40 price target.