The reset in the gold price has forced miners to change their focus to margins rather than volumes, Jefferies observed in a broker note.
With a gold price tail-wind unlikely to reappear, the US broker's favoured play in the sector is Acacia Mining (LON:ACA), which can still increase free cash flow and enhance its net cash position.
Randgold (LON:RRS), meanwhile, is fairly valued at present, while Polymetal (LON:POLY) is overvalued as it enters a period of declining free cash flow and sustained high net debt.
The price targets for the trio are: Acacia (buy), 320p; Polymetal (under-perform), 470p; Randgold Resources (hold), 4,000p.
Deutsche Bank says it continues to rate Carnival (LON:CCL) a 'buy' after its recent results, which showed an improvement in booking volumes that should enable the company to hold the line on prices.
“Management comments on H1/16 bookings being at lower constant dollar prices sparked investor concerns about a lack of perceived pricing power; however, we think that the group’s strategy of building volumes and load factors initially at lower prices with the goal of holding close in pricing higher rather discounting heavily is the right strategy for improving average selling prices and consequently group returns,” Deutsche said.
It keeps its price target unchanged at 3,650p, using a price/earnings ratio of 18 as a benchmark.
The German bank is also bullish on water group Pennon (LON:PNN), which recently hosted an analyst briefing on its South West Water unit that highlighted management's confidence in its ability to continue to perform well over the 2015-20 regulatory period.
“Its comments suggested scope for significant out-performance under cost based incentives, which combined with financing out-performance should allow for very attractive returns on equity,” Deutsche said.
The sharp drop in Pennon’s share price this year provides an opportunity to buy a sector leading water business with a bear case valuation priced in for its waste business, Viridor, in Deutsche's view.
House broker Cantor Fitzgerald has reiterated its 'buy' recommendation for Symphony Environmental Technologies (LON:SYM) following interim results announced this morning that were in line with expectations.
Progress continues to be encouraging, in the broker's view, with revenues up by 2.7% to £3.42mln compared with Cantor's estimate of £3.36mln, due largely to the steady ongoing sales of d2w masterbatch.
“Underlying demand for d2w additives remains positive in those countries where legislation is supportive and the company continues to promote the advantages of bio-degradable plastics in other regions,” the broker noted.
Shore Capital stopped holding its breath this morning as Just Retirement (LON:JUST) and Partnership Association (LON:PA.) both announced fund raising exercises ahead of their agreed merger.
“Finally, finally the capital raising,” Shore analyst Eamonn Flanagan writes, with a hint of exasperation.
“With the equity raising complete, we expect the shares to move forward to more appropriate ratings, namely well above the respective NAVs [net asset values],” Flanagan said.