Berenberg has downgraded Fresnillo to “hold” from “buy” after the precious metals miner's impressive share price rally. Their assessment cites limited upside potential, despite improved operational performance. The stock has surged, nearing Berenberg's new price target. The brokerage lifted its price target but simultaneously cut its recommendation.

Fresnillo's share price benefited from a surge in precious metals prices, especially silver. Berenberg anticipates a fiscal 2025 dividend of $1.16 per share. The firm's analysts are concerned about the lack of near-term catalysts and potential pressure on management regarding dividend payments. This comes after the company's acquisition of Probe Mining.

Berenberg expects Fresnillo to produce 591,000 ounces of gold and 48.4 million ounces of silver in 2025. The company’s growth is expected to come from the Novador gold project, which will begin production in 2030. The shares are trading at 1.83 times net asset value and 6.9 times EBITDA.

This downgrade reflects a view that the market has largely priced in the expected gains. With limited near-term catalysts and a potential plateau in precious metal prices, Berenberg suggests a more cautious approach. Investors should consider the impact of potential dividend pressures and the long-term prospects of the Novador project.