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On Friday, BMO Capital Markets resumed coverage on shares of Boliden AB (ST:BOL:SS) (OTC:BDNNF), a mining and smelting company, with a Market Perform rating. The firm also adjusted the price target to SEK300.00 from the previous SEK310.00. The coverage follows a period during which BMO Capital Markets had restricted its rating on the company.
The analyst at BMO Capital Markets highlighted the recent acquisitions of the Zinkgruvan and Somincor (Neves-Corvo) mines as a significant development for Boliden, noting that the increased mine supply should benefit the company’s smelting operations. This is particularly relevant as it may help alleviate some of the pressure from low treatment charges (TCs) that the company has been facing.
Despite the positive aspect of the acquisition, BMO Capital Markets pointed out that Boliden’s expected enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) for the years 2025 and 2026 ranges between 4 and 6 times. The firm suggests that this valuation, combined with limited potential for near-term increases in shareholder returns following the purchase, indicates that the stock is currently reasonably priced.
The analyst stated, "With the Zinkgruvan and Somincor (Neves-Corvo) acquisition completed, we are resuming coverage of Boliden at Market Perform and a SEK300 target (from MP, SEK310) after a period of restriction. The key positive from the transaction is increased mine supply for Boliden’s smelters, helping to alleviate some of the pressure from low TCs."
BMO Capital Markets has set the new price target with a conservative outlook, reflecting the recent strategic moves by Boliden and the current financial projections. The firm’s analysis indicates a neutral stance on the company’s stock, suggesting that the potential for significant stock price movement may be limited in the near term.
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