Last Update 15 Dec 25

Fair value Increased 3.42%

HOC: Higher Long-Term Gold Prices Will Drive Upside Amid Execution Risks

Analysts have lifted their price target on Hochschild Mining sharply higher, reflecting upgraded fair value estimates to about $4.70, a modestly higher discount rate, and materially stronger assumptions for revenue growth, profit margins, and long term valuation multiples, amid a more bullish outlook for gold prices.

Analyst Commentary

Recent research updates highlight a materially more constructive stance on Hochschild Mining, with price targets moving sharply higher and long term gold assumptions reset at significantly elevated levels. Bullish analysts point to a combination of stronger commodity price forecasts, operational leverage, and re rating potential across European precious metals names.

At the same time, some caution remains around execution risk and the sustainability of current market conditions. This is leading to a more balanced debate on how much of the upside is already reflected in the share price and whether the new targets fully compensate for cyclical and company specific risks.

Bullish Takeaways

Bullish analysts see the move from 370 GBp to 610 GBp in price targets as evidence that prior estimates significantly underappreciated Hochschild's earnings power and asset quality under a higher gold price regime.
The roughly 80 percent increase in long term gold price forecasts to $3,850 per ounce supports a structurally higher revenue base. In turn, this is used to justify richer valuation multiples and a higher fair value range into 2027.
Upgrades across the sector, with some research suggesting over 50 percent upside to December 2027 fair values for European gold miners, position Hochschild as a key beneficiary of sector wide capital rotation into precious metals.
Maintained positive ratings signal that, in the view of bullish analysts, the company has both the operational capacity and balance sheet strength to convert higher commodity prices into sustained margin expansion and cash flow growth.

Bearish Takeaways

Bearish analysts and more cautious investors may question whether the step change in gold price assumptions is overly optimistic, leaving Hochschild's valuation vulnerable if prices revert toward historical averages.
The rapid escalation in price targets, even when accompanied by only a Hold stance in some cases, suggests concerns around execution risk, project delivery, and potential cost inflation that could erode the modeled upside.
The reliance on a multi year rerating toward 2027 fair values introduces timing risk. Any delays in growth projects, regulatory approvals, or mine optimization could slow the realization of forecast returns.
With discount rates only modestly higher despite a more volatile macro environment, some bearish analysts may argue that risk is not fully priced in, particularly around geopolitical exposure in Hochschild's operating regions.

What's in the News

Hochschild Mining plc reiterated its 2025 production guidance, maintaining an expected range of 291,000 to 319,000 gold equivalent ounces. This signals management confidence in operational delivery despite market volatility (Key Developments).
The company reported third quarter 2025 production results showing declines year on year, with silver output at 2,291 koz versus 2,658 koz and gold at 58.01 koz versus 78.15 koz, reflecting lower grades or mine sequencing impacts (Key Developments).
Over the first nine months of 2025, silver production fell to 6,915 koz from 7,674 koz and gold to 189.75 koz from 198.31 koz, with total gold equivalent output down to 273.06 koz from 290.77 koz. This highlights volume pressure even as analysts upgrade long term assumptions (Key Developments).

Valuation Changes

Fair Value: risen slightly from £4.55 to £4.70 per share, reflecting a modestly higher central valuation.
Discount Rate: nudged higher from 8.57 percent to 8.61 percent, indicating a marginally higher assumed risk profile.
Revenue Growth: increased meaningfully from 8.3 percent to about 11.7 percent, pointing to stronger top line expectations.
Net Profit Margin: risen significantly from roughly 16.8 percent to about 35.8 percent, implying a much more profitable earnings outlook.
Future P/E: fallen sharply from around 17.3x to about 7.7x, suggesting higher earnings projections relative to the current share price.

Operational improvements, exploration success, and project pipeline diversification are set to boost output, extend mine life, and reduce risk.
Strong gold and silver demand and strengthened ESG credentials support higher revenues, valuation, and investor appeal.
Heavy dependence on successful new projects and brownfield exploration, combined with high costs, political risks, and rising debt, threaten long-term profitability and financial flexibility.

Catalysts

About Hochschild Mining

A precious metals company, engages in the exploration, mining, processing, and sale of gold and silver deposits in Peru, Argentina, the United Kingdom, Canada, Brazil, and Chile.What are the underlying business or industry changes driving this perspective?

Ongoing operational recovery and step-change improvements at Mara Rosa, including filter repairs, process reorganization, and a new thickener installation in H1 2026, are expected to restore and then increase output, lowering costs per ounce and driving higher revenue and margin expansion in 2026 and beyond.
Substantial reserve and resource growth from brownfield exploration at Inmaculada and Royropata, with significant drilling and resource conversion underway (Royropata's projected output potentially increasing from 100,000 to up to 150,000 ounces annually), is set to extend mine life and support long-term production and cash flow growth.
Project pipeline diversification, with Monte do Carmo (Brazil) and Royropata (Peru) coming online from 2028 and potentially increasing group production by ~60%, will underpin volumes and reduce jurisdictional risk, likely supporting more stable revenue and improved valuation multiples.
Structural demand tailwinds from increased gold and silver prices (up 28% and 25%, respectively, year-on-year) are being fueled by persistent inflation and heightened safe-haven investment appetite, which should continue to positively impact realized selling prices and overall top-line growth.
Enhanced ESG credentials-demonstrated by DNV Level 2 certification, improved safety, water consumption, and waste recycling metrics, and ongoing inclusion in the FTSE4Good Index-position Hochschild to benefit from tightening sectoral environmental and social standards, attracting investor capital and supporting equity re-rating through higher valuation multiples and potentially lower financing costs.

Hochschild Mining Earnings and Revenue Growth

Hochschild Mining Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Hochschild Mining's revenue will grow by 6.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 13.8% today to 15.3% in 3 years time.
Analysts expect earnings to reach $195.5 million (and earnings per share of $0.38) by about September 2028, up from $148.4 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $322 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.7x on those 2028 earnings, down from 15.4x today. This future PE is greater than the current PE for the GB Metals and Mining industry at 11.7x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.71%, as per the Simply Wall St company report.

Hochschild Mining Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Hochschild's long-term production outlook is heavily reliant on bringing new projects like Royropata and Monte do Carmo online from 2028 onward, creating significant execution risk; any permitting delays, technical setbacks, or regulatory issues could defer or reduce these anticipated production increases, thus impacting future revenues and earnings growth.
Persistently high all-in sustaining costs, particularly at Mara Rosa and San Jose (with operational challenges and exposure to lower-grade ore bodies), make profitability vulnerable to weaker gold and silver prices; if commodity prices decline or cost inflation continues, this could compress net margins and lower net earnings.
The company's core assets in Peru and Argentina remain exposed to ongoing political and fiscal instability-including volatile taxation regimes, elimination of government export incentives (as seen in Argentina), and potential future changes following elections-raising the risk of higher royalties, taxes, or operating disruptions, which could suppress cash flows and impact profitability.
Hochschild's overall reserve and production base is largely dependent on ongoing brownfield exploration success to replace depleting resources at mature assets such as San Jose and Inmaculada; failure to deliver meaningful new mineable reserves would shorten asset lives and reduce long-term revenue visibility and valuation.
Increasing capex requirements and higher debt levels (with net debt at $202 million and rising capital outlays for projects like Mara Rosa) could constrain the company's ability to fund growth, pay dividends, or respond to adverse market conditions, increasing financial risk and potentially impacting future shareholder returns.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £3.322 for Hochschild Mining based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £3.72, and the most bearish reporting a price target of just £2.81.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.3 billion, earnings will come to $195.5 million, and it would be trading on a PE ratio of 14.7x, assuming you use a discount rate of 7.7%.
Given the current share price of £3.31, the analyst price target of £3.32 is 0.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

HOC: Stronger Gold Price Outlook Will Drive Substantial Upside Through 2027