Analysts at Barclays have stuck their neck out and suggested that the slump in Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) shares this week is a buying opportunity.
The Peru-focused miner took a bath on reports that the country’s government plans to shut its two most important mines, Pallancata and Inmaculada mines, along with several others.
Barclays, though, suggests the sell-off in Hochschild shares this week (-31% in dollar terms) in response to the threat presents a significant value opportunity.
“While we cannot completely rule out risks of mines being shut (in that case Barclays values Hochschild at 45p/sh)” the broker said that the subsequent softening of the Peruvian government's tone suggests the 60% valuation discount to peers on several yardsticks presents "a significant risk-reward opportunity".
.Barclays has upgraded its price target 165p and its investment stance to overweight.
Shares today were trading at 115.2p, up 0.7%.