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Broker tips: Polymetal, ITV

By Iain Gilbert

Date: Friday 28 Jan 2022

Broker tips: Polymetal, ITV

(Sharecast News) - Analysts at Berenberg slashed their target price on precious metals miner Polymetal from 2,200.0p to 1,500.0p on Friday after the firm's full-year production beat was soured by costs that came in above guidance.

Berenberg noted Polymetal, which operates a portfolio of mines in Russia and Kazakhstan, had reported fourth-quarter gold equivalent production of 467,000 ounces, taking production for 2021 to 1.677m ounces on a gold equivalent basis, versus guidance of 1.6m ounces.

The German bank highlighted beats at Polymetal's Dukat mine, due to a higher grade of gold being mined, as well as Svetloye and Omolon, while production at Kyzyl, Varvara and Albazino were in line with expectations and production from Mayskoye was "incrementally light".

Berenberg, which reiterated its 'buy' rating on the stock, also pointed out that Polymetal's new Nezda mine was now fully ramped up with production in line with its expectations.

However, while Polymetal noted that concentrate exports from Nezhda and Kyzyl to China had not been affected by tighter environmental rules, all-in sustaining costs were guided to be 5% above the upper end of the form's guidance range of $925-975.00 per ounce - versus the analysts' previous expectation of $962.00 per ounce, implying an AISC of $1,020.0 per ounce.

Barclays lifted broadcast ITV to 'overweight' from 'equalweight' on Friday, increasing the price target to 160.0p from 140.0p, giving five reasons for the upgrade.

More broadly, the banks said European broadcasters are almost universally unloved by investors who believe that the change in consumption patterns from linear to on-demand will result in dwindling ad revenues.

"While consumption has indeed changed dramatically, ITV's ad revenues have grown at 2% since 2010, and we think 2022E shouldn't be different, with Q1 ad trends well above expectations and media buyers putting TV ad growth at 4%," it said.

"We also believe that ITV will disclose the split of ad revenues between linear and on-demand at their FY21 results (3 March), demonstrating that part of their core business is growing."

Barclays also said there is "significant" M&A optionality and the studios could be re-evaluated by investors if management delivers on their 5% annual revenue growth target.

"Finally, ITV is arguably inexpensive on 8x P/E and 11% estimated free cash flow yield."

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