Citigroup ups Centamin to ‘buy’, points to stabilisation in Egypt

Citigroup upgraded Centamin to ‘buy’ from ‘neutral’ and set a new price target of 76p, pointing to a stabilisation of the political situation in Egypt.
“During Egypt’s more politically-troubled period, we decided that it was not advisable to set a target price for the group and rated it neutral,” the bank said Thursday.

Citi said that between mid-2013 and mid-2015 it had no ‘buy’ rated UK gold shares. As a result, the lack of a target price on Centamin did not leave the shares at odds with the bank’s general sector view.

However, on 24 July the bank upgraded three gold and silver shares to ‘buy’ on the back of an improved sector view. It noted that all three had the pre-requisites of favourable cash cost profiles and strong balance sheets.

“Centamin also has these attributes and this was a contributory factor to our re-examination of our position on not setting a target price for Centamin,” said Citi noting that the company’s second-quarter production was strong.

Centamin now joins Acacia Mining, Randgold Resources and Fresnillo on the bank’s gold/silver ‘buy’ list.

As a result of the strong production update and guidance, Citi upped its 2015 earnings per share estimate from 7.3 cents to 7.4 cents, its 2016 estimate from 9.4 cents to 10.4 cents and its 2017 forecast from 10.4 cents to 12.2 cents.

At 1236 BST, Centamin shares were down 0.4% at 60.50p.