Broker tips: Tharisa, XPS Pensions Group

(Sharecast News) - Analysts at Berenberg lowered their target price on mining outfit Tharisa from 190.0p to 150.0p on Tuesday following the publication of the group's fourth-quarter production report. Berenberg noted that Tharisa's production report showed it producing 30,700 ounces of platinum group metals and 413,000 tonnes of chrome concentrates from its mine in South Africa - compared to forecasts of 41,500 and 428,000, respectively. This also takes full-year volumes to 145,000 ounces for PGMs and 1.58m tonnes for chrome concentrates.

The German bank said the weakness in PGMs appears to have been driven by a mixture of lower throughput and recoveries, which came in at 62.7%, down versus Q3's 69% and below its 75% estimate, and also looked to have been a function of ore mix from blending its own material and third-party feed.

Reef mined for Q4 was 1.2m tonnes, softer than its 1.4m tonnes estimate, while reef milled of 1.3m tonnes, a "little lighter" than its 1.35m tonne estimate.

Berenberg, which stood by its 'buy' rating on the stock, highlighted that due to weak PGM prices, Tharisa had elected to push out the timeframe for the commissioning of its Karo PGM project in Zimbabwe by 12 months to June 2025, with scope to accelerate this if market conditions become "more favourable".

Analysts at Canaccord Genuity upped their target price on consulting and administration business XPS Pensions Group from 251.0p to 262.0p on Tuesday, citing "positive momentum" that had carried over into the first half of the new trading year.

Canaccord Genuity said that following a "strong" first-half pre-close update from XPS, it had upgraded its FY24-26 adjusted diluted earnings per share forecasts for the group by 4-5%.

"During the period, strong revenue growth was driven primarily by high activity levels with additional benefit from inflation-linked contracts," said Canaccord.

The Canadian broker also noted that XPS had continued to invest during the period "whilst continuing to deliver operational gearing", with the board now "confident of achieving full-year results ahead of its previous expectations".

"We update our forecasts, resulting in circa 5% revenue upgrades across our forecast horizon and adjusted diluted EPS forecasts by 4-5%. We expect the adjusted EBITDA margin to improve to 26.3% in FY24 (FY23:25.5%)," said Canaccord, which reiterated its 'buy' rating on the stock. "We maintain our previous valuation and target price methodology, ie applying a target PE multiple of 17.8x to the CY24E EPS forecast."