On Tuesday, UBS revised the rating for Boliden AB (ST:BOL:SS) (OTC: BDNNF) stock, upgrading it from Sell to Neutral and increasing the price target to SEK310 from SEK300.
The analyst's assessment acknowledges the challenges Boliden faces, such as lower mined grades and the impact of record low 2025 benchmark copper and zinc smelter treatment charges (TCs) on smelter earnings. Despite these headwinds, the analyst notes the acquisition of Neves Corvo and Zinkgruvan has proven more beneficial for Boliden than initially anticipated.
The analyst believes that the acquisitions are earnings accretive and strategically sensible. UBS points to a potential turnaround story for Boliden, driven by improvements in mining grades and organic growth in smelter earnings, particularly with the restarts of Odda and Ronnskar. He also suggests that potential synergies from the integration of Zinkgruvan and Neves Corvo could play a role in the company's future performance.
However, UBS cautions that positive catalysts for Boliden may not materialize over the next 12 months. He also raises concerns about a possible equity issuance in 2025 to fund the acquisitions of Neves Corvo and Zinkgruvan, which could act as a near-term overhang on the stock.
Concluding his assessment, UBS indicates that after a challenging period for Boliden, the likelihood of unforeseen negative catalysts that are not already reflected in the stock price has diminished. This assessment leads to a more balanced risk versus reward scenario for Boliden, prompting the upgrade to a Neutral rating.
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