RBC raises target price on Polymetal despite 'small miss' in H1

RBC said that while first-half earnings before income, tax, depreciation and amortisation and underlying earnings were down 2% and 6%, respectively, those numbers were but "a small miss".

The Canadian broker said those misses versus consensus estimates were not "too concerning" given that a seasonally stronger second half was already in the pipeline and due to continued strong gold prices.

And with another solid interim dividend on Tuesday, and if spot prices persisted, Polymetal was firmly on track to deliver a full-year yield 4.0%, it added.

On the project front, RBC also highlighted that "everything to deliver growth" also appeared to remain on course.

In addition to upping its target price on Polymetal's hares from 1,100p to 1,200p, RBC reiterated its 'outperform' rating on the group's stock

"Our price target of 1,200p is based on multiples of 1.5x (was 1.4x) P/NAV and 12.0x (was 11.0x) P/adj CF on our blended 2019–20 estimates," said RBC.

RBC stated that such multiples were at "a small discount" to global peer averages, due to the jurisdictional discount stemming from the group's assets in Russia and Kazakhstan, but slightly above their two-year average as a result of changes in Polymetal's portfolio that had increased the quality of production, robustness of its free cash flow and recent record gold prices.