Fresnillo share price bounces as miner reasserts guidance

Liam Roche
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Fresnillo share price bounces as miner reasserts guidance

Fresnillo Share Price

The Fresnillo share price (LON:FRES) is up by 6.55% over the past five days as the FTSE 100 company divulged some positive news. The move comes on the back of a sustained downturn in the Fresnillo share price, particularly since November 2020 onwards.

This was in part down to the fact that interest in precious metals cooled following an upturn on the back of the pandemic-induced stock market crash. While the debate will go on about the place precious metals have in the modern world economy, this article will look at some recent news regarding Fresnillo, and what it could mean for its share price going forward.

Guidance

Fresnillo yesterday reaffirmed its annual outlook after the FTSE 100 company saw improvements in its silver output during Q2.

The precious metals miner said it is on course to meet its guidance for the current year of between 675,000 and 725,000 ounces of gold and between 53.5m to 59.5m ounces of silver.

“We remain on track to meet our full year targets and our production guidance for 2021 is unchanged, though we remain vigilant around the continued evolution of the pandemic and its potential future effect on our operations, in particular the implementation of any future new work restrictions,” said chief executive of Fresnillo Octavio Alvidrez.

RBC Capital Forecast

RBC Capital Markets, the global investment bank, upgraded its rating for the Fresnillo share price to ‘outperform’ from ‘sector perform’, it was revealed this month. RBC’s change in outlook came about as it considers the market to have reset following weak Q1 silver production and lower guidance.

RBC is expecting to see a growth phase from Fresnillo, as its Juanicipio project has been accelerated.

“With the shares underperforming peers and trading at the low end of its historical multiple ple range, we upgrade our recommendation,” RBC said.

Anglo American share price: CEO hints at more to come beyond dividend

Liam Roche
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Anglo American share price: CEO hints at more to come beyond dividend

Anglo American Share Price

The Anglo American share price (LON:AAL) is up by 4.91% during the afternoon session on Thursday as rising commodity prices helped the miner record its best H1 profits in its over 100-year history. Today’s movement is a continuation of a mini-surge over the past five days which has seen the FTSE 100 mining company add 11.03%.

Looking back over the past five years, Covid aside, it has been smooth sailing for the Anglo American share price, which is up by 296.23% over the time period. However, investors will do will to remember the cyclical nature of mining stocks. After all, the Anglo American share price has not reached its high of around ten years ago, when it was above 3,300p.

Results

Anglo American, whose portfolio spans diamonds, platinum, copper, iron ore & more, reported profits before tax of $10.1bn for six months ending in June. This figure is up from $1.7bn compared to the same period a year ago.

“The first six months of 2021 have seen strong demand and prices for many of our products as economies begin to recoup lost ground, spurred by stimulus measures across the major economies,” said Anglo chief executive Mark Cutifani.

Among the main factors in improving Anglo American’s profit were iron ore, the commodity used to make steel, as well as the London-listed company’s platinum-group metals (PGM). The average market prices for Anglo’s commodities rose by 62% in H2, compared to a year ago.

The subsequent cash generated from those sectors enabled Anglo to reduce its net debt to $5.6bn, down from $7.6bn. In addition, Anglo was able to make a substantial payout to shareholders.

Dividend

Following its record half-year profits, Anglo American is to return $4.1bn to its shareholders.

Anglo declared a $2.1bn ordinary dividend, as well as confirming it will return an additional $2bn of “excess cash” to shareholders via a $1bn special dividend and a $1bn share buyback.

“The share buyback should tell you that we don’t think this is as good as it gets,” said Mark Cutifani, which could be music to the ears of investors.

Federal Reserve will wait longer before slowing its support for the US economy

Liam Roche
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Federal Reserve will wait longer before slowing its support for the US economy

Fed Chairman Jerome Powell said risks to economic outlook remain

The Federal Reserve said on Wednesday that the economy is making forward progress thanks to the continued vaccine roll-out.

Continuing to toe the line that inflation is mostly transitory, the Fed also kept its interests rates close to zero.

The US central bank said that risks to the economic outlook remain, despite positive data regarding jobs and the strength of the economy.

Hinesh Patel, portfolio manager at Quilter Investors, believes that the Fed must act sooner or later if inflation continues to rise:

“Jerome Powell and co. like where the economy is heading and seem content to wait until the data becomes even clearer and as such will continue to sit on their hands for just a while longer yet,” said Patel.

“Unfortunately for them there is very little they can do just now. The effects of this pandemic, and the subsequent recovery, have been felt very differently by varying groups of the population. So far it has been a two-speed recovery with low-income workers continuing to be adversely affected. With so many still relying on government support and not yet back in work or seeking employment, Powell will keep the spending taps on to support the wider economy.”

A time will come when the market will need to see a clearer plan for the reduction in quantitative easing, according to Patel.

“Inflation is a beast that can quickly get out of control and if the Fed has to act harsher than it would have done if it did so previously volatility would ensue.”

“With the recovery well under way and vaccination remaining a priority, the US arguably doesn’t need easing at their current levels. Powell obviously doesn’t want to act too early or make a misstep, but communicating further under what conditions tightening would take place may go some way to placating markets that are worried about price rises getting out of control,” Patel added.

AstraZeneca receives boost from Covid vaccine

Liam Roche
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AstraZeneca receives boost from Covid vaccine

AstraZeneca acquires rare medicines business Alexion

AstraZeneca (LON:AZN) saw its revenues surge during H1 thanks to its development of new medicines and sales of its coronavirus vaccine.

The pharmaceutical company made $1.2bn in sales from the vaccine over the six month period ending in June, rising from $275m in Q1.

It has been suggested that the Astrazeneca vaccine is superior to its rivals in combatting the pandemic as it is more affordable and easier to use. AstraZeneca and it has supplied 1bn doses to 170 countries so far.

$572m of vaccine sales during H1 came from Europe, while $455m came from emerging markets. The FTSE 100 company pledged to produce the vaccine on a not-for-profit basis during the pandemic.

In non-vaccine news, AstraZeneca acquired rare medicines business Alexion, an addition to its expanding cancer medicines unit.

With Alexion taken into account, AstraZeneca expects its total revenue to rise by over 20% this year, excluding sales from the vaccine.

The AstraZeneca share price is up by 0.21% just before lunchtime on Thursday.

Sheena Berry, equity research analyst at Quilter Cheviot, commented on the pharma company’s results:

“AstraZeneca’s core business continues to generate good growth with sales up by a quarter on the month. Even without factoring in the revenue from the Covid-19 vaccine, sales of other pharmaceutical lines increased by 12% to $7.3bn, 2% higher than expectations,” said Berry.

“Demographic trends and the swelling middle classes in emerging markets continue to act as a big tailwind for the pharmaceutical business, with EM sales up 31% and sales in China up 12%.”

“AstraZeneca has updated its guidance following the completion of the Alexion acquisition last week. Alexion specialises in orphan drugs to treat rare diseases, and offers both margin expansion and Improved cash generation for the wider group.”

“AstraZeneca has increased revenue guidance from the low-teens to the low-twenties percentage, excluding any contribution from the Covid-19 vaccine, but it seems likely this may prove to be a conservative estimate.”

Positive momentum for UK banks continues with Lloyds results

Liam Roche
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Positive momentum for UK banks continues with Lloyds results

Lloyds resumes dividend as profits bounce back

Lloyds (LON:LLOY) confirmed on Thursday that it swung to a H1 profit, as well as announcing an interim dividend.

The news comes as the FTSE 100 bank is being supported by a surge in home buying and an improving economic outlook in the UK.

Lloyds’ update closely follows that of rival Barclays, which posted positive earnings results yesterday for much of the same reasons.

“Put Lloyds results together with Barclays’ from the day before and you have the beginning of a trend in UK banking,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

“Massive swings in the level of bad loan provisions is flattering the bottom line, leading to a huge leap in profits for Lloyds this quarter. We expect that trend to continue for much of this year, assuming the outlook for the UK economy continues to brighten, but come 2022 the tailwind will have blown itself out – it will be up to banks to make their own weather.”

Lloyds made a profit before tax of £3.9bn for the six month period ending in June, which surpassed the average analyst forecast by £0.8bn.

Over the same period a year ago the banking giant made a H1 loss of £602m, having set aside billions as an insurance against bad loans caused by the pandemic.

Lloyds also confirmed a 0.67p interim dividend, while its share price rose by 0.79% to 47.15p per share. Since the turn of the year the Lloyds share price is now up by 35.33%.

Rob Murphy, Managing Director, Edison Group, also commented on Lloyds’ results.

“Today’s announcement that Lloyds had acquired Embark, a retirement platform business will help accelerate business momentum. This acquisition emphasises the Group’s continued commitment to expand its presence in the retirement and estate planning markets.”

“The past six months have identified the Group’s resilience, and with lockdown finally having eased, it comes as no surprise that guidance for the year has now been updated as the positive momentum looks set to continue. Following a string of new hires at the top of the business and with the Group now awaiting the arrival of its new CEO in August, the company looks to have settled on a senior leadership team. The combination of this and an impressive first half to the year, the outlook for customers, investors and other key stakeholders looks positive,” Murphy said.

FTSE 100 advances as Chinese stocks stage mini-comeback

Liam Roche
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FTSE 100 advances as Chinese stocks stage mini-comeback

The FTSE 100 advanced 0.65% to 7,062 on Thursday, with the top riser being ratcatcher Rentokil after it said its core businesses had all returned to growth.

“The UK market saw investors flock to stocks that would benefit from economic expansion, principally commodities producers and banks,” says Danni Hewson, financial analyst at AJ Bell.

More broadly, across the world, global markets cannot seem to make their mind up.

“After the debacle involving a big sell-off in China-related stocks, Asian markets staged a big comeback with Hong Kong’s Hang Seng index up 3.1% and China’s SSE advancing by 1.5% on chatter that Beijing wouldn’t be overtly draconian towards Chinese companies with listings in foreign markets if they kept in line with local laws,” said Hewson

Regulatory interference has been behind the recent slump in China-related stocks and there have been growing fears this would lead to investors turning their backs on the growing number of Chinese companies listed in places like New York.

FTSE 100 Top Movers

Rentokil (5.8%), Anglo-American (4.36%) and Shell (3.63%) are leading the way atop the FTSE 100 on Thursday, having each released positive results.

At the other end, Smith and Nephew (-7.66%), BT Group (-7.11%) and SSE Group (-4.43%), have been dragging back the UK index.

Everyman Media Group poised for strong recovery

Liam Roche
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0
Everyman Media Group poised for strong recovery

Everyman used the closure period to upgrade its facilities and improve its customer experience

Everyman Media Group (LON:EMAN), the independent cinema company, confirmed on Thursday that the business returned to a profit following its re-opening.

Admissions in the period since re-opening until 1 July reached 66% of 2019 levels, ahead of director expectations.

This is despite restrictions such as the Rule of Six, table service, 50% capacity restrictions in venues, and social distancing all being in place during this period.

The news comes after all of its venues were closed for the first 20 weeks of FY21 due to Covid, with 33 venues re-opening on 17 May, and social distancing measures remaining in place until 19 July.

The AIM-listed company used the closure period to upgrade its facilities and generally improve its customer experience.

Alex Scrimgeour, Chief Executive Officer of Everyman Media Group, said:

“We are delighted to have welcomed back so many Everyman customers since re-opening in May, subsequently delivering a period of profitable, cash-generative trading.”

“The speed and confidence with which the Everyman community has returned, together with our increased market share, demonstrates the ongoing appeal of our offering. People are clearly still looking to spend a great time out with friends and family, in an environment which instils confidence and provides high quality hospitality; now more than ever.”

“With significant available liquidity and more positive market conditions we are excited to be again turning our focus to plans for growth. We’re expecting you, Mr. Bond.”

The Everyman Media Group share price is up by 0.36% during the morning session on Thursday.

Diageo poised for return of nightclubs but warns of volatility ahead

Liam Roche
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0
Diageo poised for return of nightclubs but warns of volatility ahead

Diageo increased its dividend by 5%

Diageo (LON:DGE), the alcoholic beverages company, confirmed on Wednesday that its net sales rose by 16% on an organic basis to £12.7bn.

The company, which makes Smirnoff, Guiness and Gordon’s, saw growth in all regions, which it put down to its downturn in sales during the pandemic.

Diageo’s underlying profit rose at a quicker rate than its sales, with an increase of 18% to £3.7bn.

The FTSE 100 company confirmed it will pay a final dividend off 44.59p per share, an increase of 5% compared to the year before, bringing its full year payment to 72.55p.

The alcohol seller is expecting its organic net sales growth to continue into the next financial year, as well as anticipating a return to pre-pandemic levels of growth in North America.

At the time of writing the Diageo share price is down by 0.31%.

Sophie Lund-Yates, Senior Equity Analyst at Hargreaves Lansdown, commented further on Diageo’s results:

“As the maker of Smirnoff, Guinness and Gordan’s it comes as no surprise that the shuttering of bars and night clubs left Diageo with a nasty hangover of problems.”

“However, the strength of the group’s brands means it was able to recoup some of its losses through a huge increase in supermarket trade in some key markets, and it’s come out of the pandemic in remarkably resilient shape. It’s now poised to make the most of the re-opening of Europe’s bar and nightclub scene.”

“Something to keep in mind is the volume of footfall in bars and nightclubs. There’s certainly excitement about re-opening, we’ve all seen the early queues, but there’s also a have-fun-at-home sentiment that’s been bred by lockdowns. It’s possible this could see a permanent reduction in the number of feet on dancefloors as things get back to normal, which could see the likes of Diageo face a headwind.”

Facebook warns of slow growth ahead

Liam Roche
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0
Facebook warns of slow growth ahead

Facebook revenue surpasses analysts’ expectations for the quarter

Facebook (NASDAQ:FB) on Wednesday revealed that it expects its revenue growth to slow “significantly” in H2 of 2021.

During the three months to 30 June the social media company’s revenue rose to $29bn (£21bn). The figure was up from $18.69bn compared to the same period a year before.

Th revenue figure surpassed analysts’ expectations of $27.9bn.

The tech giant reaped the rewards from lockdowns as its ads targeted people who were at home more often than usual.

However, as Facebook “laps” periods which previously saw high levels of growth, it expects to see a slowdown in its sales.

Facebook warned that revenue growth during Q3 and Q4 was likely to “decelerate significantly”. In after-hours trading on Wednesday the Facebook share price fell by 4%.

Year-to-date its share price has added 38.8%.

Facebook’s results come amid a string of strong performances from America’s tech giants, including Alphabet, Apple and Microsoft, over the past quarter.

Facebook now has 2.9bn monthly users and owns WhatsApp and Instagram.

Tip update: More than 40% rise in Hargreaves Services price in three months

Andrew Hore
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Tip update: More than 40% rise in Hargreaves Services price in three months

Hargreaves Services (LON: HSP) has put out a string of trading statements since it was recommended during April. A strong performance from the German associate boosted profit in the year to May 2021, while the longer-term prospects for the core operations are good.
Last year was a tough one for Hargreaves Services, but it remained profitable and cash generative.
Hargreaves Services is no longer involved in coal or British Steel. That hit the contribution of the environmental, logistics and minerals business. The mechanical and electrical engineering and materials handling businesses increased ...

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