Rio Tinto PLC and Centamin PLC kick off mining theme; Netflix Inc customer churn

Miners will be a big theme among this week’s reporting companies, with two FTSE 350 names kicking things off on Tuesday in markedly different places. 

FTSE 100-listed  () earlier this month reached its highest level since the global financial crisis, while last August FTSE 250 firm  () hit an all-time high.

Ahead of these updates, analysts at JP Morgan Cazenove said the new year had begun with “euphoria reminiscent of 2009/10”, a period that marked the last major bull run for the mining sector.

The bank’s analysts pointed out that the mining and steel stocks represent what it called default exposure to a “global growth, rebound and reflation”, with sector shares offering “the cheapest trading multiples in Europe and market-leading capital returns”.

Rio, despite blowing up sacred aboriginal burial sites, was carried higher on the mining rollercoaster last year, helped as Chinese infrastructure spending creates demand for steel, which requires the iron ore that the company produces.

READ: Rio Tinto is tremendous, says new chief executive 

However, last week, analysts ripped off their ‘buy’ recommendation as they expect iron ore prices to normalise through the second half of 2021 and 2022, although near-term fundamentals remain very tight.

As for Centamin, the pure-play gold producer was carried higher on the coronavirus gold rush, but was hit by geotechnical problems at its Sukari mine in Egypt and production disappointments.

After Sukari’s life-of-mine update in December, analysts at UBS said the reset expectations and new mine plan appeared to be conservative and they saw value upside from exploration and/or M&A and the turnaround of Sukari under new boss Martin Horgan.

With the aim of producing 450-500koz at all-in costs below US$900 an oz from 2024, a strong balance sheet and good dividend yield, BoA Merrill Lynch was also on board, forecasting underlying profit (EBITDA) for 2020 of US$420mln and US$448mln for 2021.

banks on Boost 

Despite the lending market mostly drying up during the pandemic as lockdowns cut back on spending, PLC () has managed to retain some semblance of organic growth in its first half of 2% which investors will hope has continued when the firm releases a trading update tomorrow.

The FTSE 100 company’s consumer division, which gives people access to credit reports, has served as the bright spot in the North and South America markets, with credit matching services becoming more attractive as banks have become less willing to lend

Meanwhile, the company’s performance has also been boosted by the launch of Boost in the US, which lets users add utility bills and subscriptions to their credit reports, so shareholder may be eyeing any plans by the firm to also introduce the service to the UK to boost its business in the country, which has been dented by lower lending and slower investment decisions.

However, with the new coronavirus (COVID-19) lockdown measures likely to have dented recovery chances, the outlook will also be a key point for the firm going forward as the credit market continues to be held back.

and churn

This week the US reporting season gets properly underway, and for a lot of retail investors video streaming star Inc () will be of particular interest, especially with the stock having gained around 45% to a US$220bn market cap last year, but this is after losing more around 10% of ground from September’s all-time high.

The decline is likely to be a combination of the company’s lofty valuation, disappointment with the subscriber numbers and guidance given at the third-quarter by founder Reed Hastings and the result of a shift toward cyclical, recovery stocks and away from those stocks which shone during the early stages of the pandemic.

The average Wall Street forecast for tomorrow points towards earnings per shares of US$1.40 on…