Acacia Mining (LON:ACA) has revealed its inflexibility and its struggles turning around the Bulyanhulu mine, in Tanzania, says Deutsche Bank, which gave the miner one of three downgrades today.
Deutsche analyst Anna Mulholland says Acacia’s wafer-thin cash margin has now disappeared amid rising operating costs (now seen at US$1,155 per ounce) and now losses on production will start to eat into the cash balance.
Mulholland also reckons Bulyanhulu’s ramp up will be prolonged.
“We think the journey to a 350kozpa run-rate for Bulyanhulu will now take longer – we assume until 2017 instead of 2016 - and in the weak gold price environment we forecast, 2015-16 earnings will flat line as a result,” she said in a note.
Deutsche cut its price target to 200p from 240p (current price – 227p) and repeated a ‘hold’ recommendation.
At the same time Jefferies, which rates Acacia as a ‘buy’, also reduced its target to 280p from 320p while JP Morgan, which has it as ‘overweight’, dropped its bar to 310p from 340p.
Jefferies analyst Alan Spence said: “While disappointing for 2015, key underlying metrics for future performance at Bulyanhulu remain on track.” Meanwhile, JP Morgan’s Dominic O'Kane said: “Despite lower earnings forecasts, we continue to regard ACA as undervalued.”
Elsewhere, JP Morgan also downgrades Marks & Spencer (LON:MKS) to ‘neutral’ from ‘overweight’ as analyst Georgina Johanan is expecting another negative quarter.
“Whilst we continue to like the self-help story and see the potential for ongoing gross margin gains, we do think that M&S has less opportunity to reduce opex growth guidance than in previous years,” she said in a note.
JP’s target price for Marks is reduced to 550p from 600p (current price – 505p).
RBC Capital cut Sports Direct (LON:SPD) to ‘sector perform’ from ‘outperform’ and set an 850p target (current price – 759p).
UK property firm Hammerson (LON:HMSO) was upgraded by HSBC to ‘buy’ from ‘hold’, while the bank also raised targets for others in the sector – such as Derwent London (LON:DLN), Londonmetric Property (LON:LMP) – and Shaftesbury (LON:SHB) saw its recommendation lifted to ‘hold’ from ‘reduce’.
UBS upgraded software and financial data services group Fidessa (LON:FDSA) to ‘buy’ from ‘hold’.