On Friday, BMO Capital Markets adjusted its stance on Lucara Diamond Corp. (LUC:CN) (OTC: LUCRF), reducing the price target to C$0.50 from the previous C$0.60, while keeping a Market Perform rating on the stock. The revision follows Lucara Diamond's release of its third-quarter results for 2024, which did not meet expectations due to several factors impacting the company's performance.
The Karowe mine in Botswana, operated by Lucara Diamond, experienced lower than anticipated production as a result of reduced throughput. However, this was somewhat balanced out by higher feed grades. The financial outcomes for the company were also below expectations. The earnings and revenues fell short, primarily due to a smaller volume of diamonds sold and softer diamond prices than anticipated.
Despite the setbacks in the third quarter, Lucara Diamond has chosen to uphold its production and cost guidance for the year 2024. However, the company has significantly reduced its revenue guidance, prompting BMO Capital Markets to adjust the price target accordingly. The decision reflects the challenges faced by Lucara Diamond in the past quarter and the revised expectations moving forward.
BMO Capital Markets' analyst noted the factors leading to the reduced price target, stating, "Lucara Diamond announced its Q3/24 results with production from its open-pit Karowe mine (Botswana) a miss due to lower throughput, though offset by higher feed grades. Earnings (and revenues) were also a miss due to lower-than-expected diamonds sold and lower pricing. While 2024 production and costs guidance have been maintained, revenue guidance has been significantly lowered."
With the new price target of C$0.50 per share, BMO Capital Markets continues to view Lucara Diamond Corp. as a Market Perform stock, indicating a neutral stance on the company's shares following the recent financial results and updated revenue outlook.
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