This probably qualifies as lukewarm endorsement of platinum miner Lonmin Plc (LON:LMI).
Peel Hunt on Tuesday upgraded its recommendation - from ‘sell’ to ‘hold’ - but said ‘real challenges remain’.
The change in stance follows the fall in the share price from 219p, when Peel told clients to avoid the stock, to the point today where it was trading at 89p, or 6p below the broker’s price target.
Analyst Peter Mallin-Jones sees one major obstacle to a fuller re-rating of the stock that essentially negates the recovery in the price of platinum group metals and the improvement in market dynamics.
This is the estimated US$375mln funding gap that opens up in 2020.
“We still believe management needs higher prices and to implement further dramatic cash-saving measures,” said Mallin-Jones.
“As such, we see the need for another meaningful highly dilutive equity raise over the next few years. This overhang means we only upgrade to hold.”
Of the eight analysts logged as following Lonmin by the Brokerforecasts site only one has a ‘buy’ recommendation. Four are ‘sellers’, while remainder share Peel Hunt’s opinion in seeing the stock as fully valued.
The consensus price target is a punchy 122p a share.