Broker tips: Mining stocks, CRH, Barclays

The recent re-rating in mining stocks and weak commodity prices has prompted Liberum to downgrade its recommendations on sector giants BHP Billiton, Glencore, Anglo American and Rio Tinto.

The broker lowered its ratings on all four from ‘sell’ to ‘hold’ and slashed target prices, saying that copper and iron ore prices are set to “crash”. “We believe Dr Copper’s sustained fall in January is harbinger of falling global demand,” said analysts Richard Knights and Ben Davis.

UBS has lowered its ratings for precious metal miners Fresnillo and Randgold Resources from ‘buy’ to ‘neutral’ after recent strong gains from both stocks.

With shares in Mexico-focused producer Fresnillo having gained 15% since the start of the year, UBS said the valuation “now looks full”, though the company still offers the most attractive long-term growth potential of the large global gold miners. As for Africa-based Randgold, UBS said that the risk-reward balance is now “more balanced” with the shares having jumped 25% since the start of the year.

CRH’s acquisition of €6.5bn-worth of global cement assets from Holcim and Lafarge is “not without risks”, according to analysts at Liberum.

“Acquisition appears strategically attractive, finally bringing global scale to CRH's cement business, and price appears reasonable, but this is a big step for the group and so not without risk,” the broker said, adding that “a lot of recovery” is already priced into CRH’s shares.

A currency tailwind at Barclays, owing to a weaker pound-dollar exchange rate, has prompted broker Investec to reiterate its positive stance on the banking stock.

The broker maintained a ‘buy’ rating and 295p target price, saying that “Barclays remains our preferred UK bank”.