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Fresnillo share price tumbles as Morgan Stanley trims rating

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Shares in Fresnillo (LON:FRES) have taken a hit today as Morgan Stanley lowered its rating and price target on the silver miner. WebFG News reports that the analysts have pointed to uncertainty about proposed mining legislation in Mexico.

As of 13:38 GMT, Fresnillo’s share price had lost 9.06 percent to 829.92p, underperforming the broader market selloff which has seen the benchmark FTSE 100 index shed 1.06 percent to 6,975.59 points so far today. The group’s shares have lost more than 38 percent of their value over the past year, as compared with a near six-percent dip in the Footsie.

Morgan Stanley trims rating

Morgan Stanley trimmed its rating on Fresnillo from ‘equal weight’ to ‘underweight’ today, lowering its price target on the shares from 1,100p to 715p. WebFG News quoted the analysts as explaining that they see a possible impact of up to 11 percent on the group’s earnings as a result of nine recent bills in Mexico.

“However, with the emergence of two bills that could further impact Fresnillo, additional uncertainty now surrounds the investment case, carrying risks to the premium valuation,” the broker elaborated. The newswire notes that earlier this month, a lawmaker in Mexico had presented a bill which would require the consent of indigenous communities before granting mining concessions on their land.

Other analysts on silver miner

As of November 21, the consensus forecast amongst 19 polled investment analysts covering Fresnillo for the Financial Times has it that the company will outperform the market. According to MarketBeat, the blue-chip miner currently has a consensus ‘buy’ rating and an average price target of 1,208.64p.

Fresnillo posted a third-quarter update last month, revising up its gold production guidance for the full year, while flagging lower silver output.

As of 13:53 GMT, Thursday, 22 November, Fresnillo Plc share price is 820.00p.

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