Barclays Downgrades Fresnillo and Valterra Platinum on Stretched Valuations

Barclays has downgraded Fresnillo and Valterra Platinum to 'underweight' from 'equal weight', citing stretched valuations compared to peers. The bank reduced its price target for Fresnillo to 2,500 pence from 2,900 pence and lowered the target for Valterra Platinum by 10% to 1,260 South African rand.

Fresnillo trades at an average 82% EV/EBITDA premium to Endeavour Mining, compared with a 64% average premium since Endeavour's London listing in July 2021. The bank estimates Fresnillo is pricing in a gold price of $5,284 an ounce, while Endeavour is discounting a gold price 13% below spot at $3,717 an ounce.

Barclays believes the premium valuation for Fresnillo requires rising precious metals prices to deliver an acceptable total shareholder return. The bank forecasts Endeavour will achieve a mid-teen annualized total shareholder return from 7.3% organic growth and a 6.7% cash return yield in a flat precious metals price environment through 2030.

Valterra Platinum has 'materially outperformed' its platinum group metals peers and the underlying PGM basket price over the past year, making it the most expensive precious metals stock globally on spot price-to-net present value. Barclays cited limited upside to volume guidance, rising all-in sustaining costs, and capital expenditure compressing free cash flow into 2026 and 2027.