Broker tips: Hummingbird Resources, RWS Holdings
Analysts at Berenberg cut their target price on mining firm Hummingbird Resources from 24.0p to 14.0p on Thursday following the group's guidance downgrade a day earlier due to operational issues stemming from unrest and contractor performance at its Yanfolila asset.
Berenberg stated that Hummingbird's Yanfolila mine in Mali had been impacted by protests at the end of November and while the company restarted operations at the mine at the beginning of December, management noted that there were ongoing issues with its excavator fleet and contractor performance.
Hummingbird cut full-year production guidance from 100,000-110,000 ounces to 84,000-89,000 ounces as, in addition to the mine being shut down, Yanofila was not operational on a 24-hour basis following the restart, despite the Malian government providing personnel for additional security.
The German bank, which reiterated its 'hold' rating on the stock, also pointed out there were additional issues with water ingress into the Komana East and West pits that also initially impacted operations.
"In our view, responsibility for the multiple issues that have impacted Yanfolila lie broadly with Hummingbird's management. The other miners in Mali that also operate in an equally challenging political and security environment have not been similarly impacted by unrest. Furthermore, the contractor at the mine was appointed by management earlier in 2021 following a tendering process run by the company," said Berenberg.
Analysts at Canaccord Genuity slightly lowered their target price on software and services firm RWS Holdings from 750.0p to 745.0p on Thursday following its "mixed" full-year results.
Canaccord Genuity stated that following an "upbeat, yet detail-light trading update", RWS' full-year results earlier in the week showed a roughly 5% beat of its adjusted pre-tax profit expectations, with sales in line.
However, in a nervous market for technology, media, and telecom stocks, Canaccord said the shares' "soft reaction" tells it investors were ignoring the positives, like accelerating organic growth and margin expansion, and were instead focusing on the bear points.
The Canadian bank stated said bear points were RMS' guidance for a relatively slow post-Covid IP Services recovery and muted software/technology sales momentum due to a shift to software-as-a-service licenses in 2022, which caused it to reduce sales forecasts slightly, a soft free cash flow performance, and rising capitalisations of development costs, which in its view could have driven some of the pre-tax profit outperformance in 2021.
"In our view, on ~21x cal. 2022E P/E the shares trade at an overly harsh 40%+ discount to the global and UK SMIDcap Tech services peer group on ~33x. Our 745p target is slightly tweaked (was 750p) and remains based on a blend of three P/E valuations - a 15% discount to peers, the historical PE and our FY23E synergy/margin bull case of ~£8.60/share," said Canaccord, which also stood by its 'buy' rating on the stock.