Berenberg lowers target price on Endeavour Mining

Berenberg said Endeavour Mining had endured a "challenging 2024" thus far, with shares down 11% year-to-date as a result of a combination of factors.

The German bank stated Endeavour's dismissal of its chief executive officer back in January for alleged misconduct brought headlines and fallout that have acted as "a sentiment overhang" on the stock.

Secondly, Berenberg also noted that Endeavour has faced some "operational headwinds", culminating in the company warning that it will miss guidance at its flagship Sabodala-Massawa mine in Senegal but keeping overall guidance intact thanks to a strong performance at its Ity mine in Cote d’Ivoire.

Berenberg also highlighted that Endeavour's chief operating officer Mark Morcombe and executive vice president of exploration Jono Lawrence were leaving the company, its deleveraging narrative had been delayed, and that it thinks consensus estimates need to be rebased lower. Finally, the analysts pointed out that Endeavour remains in a legal debate with Lilium Mining over the delayed payment for the Wahgnion and Boungou mines in Burkina Faso, which it disposed of in 2023.

"We have rebased our estimates lower to reflect more conservatism, particularly on costs, but we think that our estimates – which sit well below consensus – are achievable and should be beatable. We had considered downgrading the shares, but we have faith in management’s ability to deliver and are reassured by the forecast circa 20% free cash flow yield over 2025-26 and the circa 4.5% dividend yield," said the analysts.

Berenberg reiterated its 'buy' rating on the stock but said it continues to maintain that a solid Q3 print was key to driving a share price re-rating.

Reporting by Iain Gilbert at Sharecast.com