Broker tips: Fresnillo, RBS, Kazakhmys

19th Mar 2013 11:18

Deutsche Bank has cut its rating for precious metals giant Fresnillo from 'hold' to 'sell', saying that the current share price is pricing in a near-perfect delivery of their medium-term growth prospects and a recovery in metals prices.They said that the stock's premium against the sector could shrink due to the "near-term headwinds" of flat production, a Mexican royalty tax and an equity issuance to meet free-float requirements.Investec has upgraded its rating for Royal Bank of Scotland (RBS) from 'sell' to 'hold', saying it sees a "speck of light in the gloom"."Given the risk of a potentially horrific and dilutive outcome for shareholders after today's Financial Policy Committee meeting, despite a c.20% two-month correction, we are still not yet brave enough to call the bottom. That said, at the risk of sounding crass, 'the passing of time' genuinely supports the RBS valuation - i.e. the discount factor that we apply to a (still distant) recovery in group profitability and returns erodes over time."Canaccord Genuity has slashed its target price for copper-focused mining giant Kazakhmys by 30% from 810p to 570p after updating its estimates for group's pre-close trading update for 2012. A 'hold' rating was kept.The broker has increased its cost forecasts and cut by-product output rates for the company, which leads to a reduction in short- and medium-term cash inflows. As such, net debt is expected to peak at $4.0bn by 2015.BC