Polymetal should outperform gold index, Berenberg ups price target

After Polymetal International was re-admitted into the FTSE 100 index on Monday, broker Berenberg upped its target price by almost 20%.

Maintaining its 'buy' rating, the price target was lifted to 1,200p from 1,035p.

Berenberg said "we expect Polymetal to outperform the Gold Equity Index over a two-month period based on previous performance".

This is based on the precious metals producer's previous strong performance in London's blue chip index between December 2011 and February 2012, when the stock outperformed the Gold Equity Index (XAU) by 20% and the gold price by 16%.

Analysts valued Polymetal, which replaced Berkley Group in the top flight index with 0.15% weighting, using a combination of a price-to-net asset value ratio of 1.75 times, with a 5% discount rate, as well as allowing for forward enterprise value metrics for 2016 and 2017.