Broker tips: Fresnillo, WH Smith, Cairn Energy, Gambling stocks

11th Apr 2014 12:27

JPMorgan Cazenove has lifted its price target for Fresnillo from 965p to 1,030p and kept an 'overweight' rating, saying it continues to favour the Mexican precious metals producer over sector peer Hochschild ('neutral')."We estimate Fresnillo should continue to enjoy lower average costs, aided by the high-quality Saucito II and San Julian projects. Over the next 10 years, we estimate an average all-in sustaining cost of $13.5/oz for Fresnillo, versus $19.2/oz for Hochschild."Numis Securities has downgraded its rating on stationery and books retailer WH Smith from 'add' to 'hold', saying that it sees a "misty horizon" despite the company's broadly in-line first-half report."Visibility beyond [18 months] is perhaps less clear-cut and, given the significant (and deserved) re-rating of the stock in recent months, we move from 'add' to 'hold'," they said.UBS has kept a 'neutral' rating on Scottish oil and gas group Cairn Energy after the "somewhat unexpected" departure of two high-level executives.UBS said that the stock is now in "urgent need of frontier drilling success" ahead of the upcoming drilling of its two wells in Senegal, 'North Fan' and 'L' prospects, and the 'Gargaa' prospect in Morocco. "These offer company making upside, but well control is limited, the basins frontier, and likelihood of success low as a result."It's hard to see any positive catalysts in the European gambling sector, according to JPMorgan Cazenove, which retained its cautious stance on stocks in light of regulatory risks. JPMorgan lowered its price targets for the majority of gambling stocks under its coverage.The bank said that despite significant negative share prices moves since the start of the year - Ladbrokes and William Hill have dropped 25% and 18%, respectively - the European gambling sector still trades well above its long-term average on a price-to-earnings basis. "With UK regulatory uncertainty set to continue well into the second half of 2014 and minimal/negative earnings per share growth in 2015, we remain cautious," JPMorgan said.BC