Broker tips: Fresnillo, Lonmin, Spirax-Sarco

22nd Aug 2012 11:59

Gold and silver miner Fresnillo is 'well-placed for recovery', that's according to Galvan Research and Trading, which has labelled the stock as a 'buy'."Fresnillo's bumper production levels look to have been sufficient to ride out the post September decline in precious metals prices, placing the miner a strong position to take advantage of any central bank stimulus-based rebound," said Andrew Gibson, Galvan's head of research.Credit Suisse has trimmed its target price for troubled platinum miner Lonmin and reiterated its 'underperform' rating on the stock, following the recent violent protests at its Marikana project in South Africa which left more than 30 of its workers dead."The company needs to raise cash given the likely trajectory of earnings over the next six months," the broker said."Under our normalised framework, a $1bn rights issue is valuation neutral at current levels for Lonmin shareholders. A smaller $500m rights issue would be value positive at current levels. However given uncertainty over achieving the 'normal' 950koz target and valuation uncertainty (high cost) we believe investors should seek theoretical 10-15%+ upside. For this to happen the price of Lonmin shares would need to fall another c10%-20% at least depending on size of issue."Jefferies has reiterated its 'hold' rating and 2,090p target price for steam trap and pump maker Spirax-Sarco after its interim results were 'somewhat disappointing'.The broker said in a research report on Wednesday morning: "We typically take a more pragmatic view than most on 'misses'; however Spirax's interim results are sharply lower than we had expected. As expected, Europe, LatAm and currency headwinds impacted the 1H12 results; however profitability was impacted by a number of additional 'issues'."BC