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On Tuesday, Mineral Resources Limited (MIN:AU) (OTC:MALRF) saw its stock rating upgraded from Hold to Buy by analysts at Jefferies, who also increased the price target to AUD25.00 from the previous AUD21.00. The upgrade was primarily attributed to the company’s ongoing cash flow positive operations and a growing confidence in the ramp-up of the Onslow project, which is anticipated to contribute to the company’s deleveraging by the fiscal year 2026.
The analysts at Jefferies acknowledged the corporate governance concerns but noted the potential upside from Mineral Resources’ underlying operations. They believe that the current valuation of the company’s stock is reasonable, which led to the positive reassessment.
Despite the upgrade, Jefferies pointed out that Onslow’s production volumes fell slightly short of expectations. Additionally, the company’s guidance for the fiscal year 2025 has been downgraded. These factors were taken into consideration but did not deter the analysts from their optimistic outlook on the company’s stock.
The new price target of AUD25.00 reflects a more bullish stance on Mineral Resources compared to the previous target of AUD21.00. This adjustment signifies Jefferies’ expectation of a higher future valuation for the company’s shares.
The statement from Jefferies concluded with a summary of their position: "Operations remained CF positive, and increasing confidence on Onslow ramp-up in FY26 should delever the business. While corporate governance issues remain of concern, we increasingly see upside from the underlying operations and think the valuation is undemanding. Onslow volumes were marginally below expectations, and FY25 guidance was downgraded. Upgrade to Buy (from Hold), PT AUD25.00 (from AUD21.00)."
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