Street Calls of the Week
Investing.com - BofA Securities downgraded Sigma Lithium Corp. (NASDAQ:SGML) from Buy to Neutral on Friday, while lowering its price target to $7.00 from $10.00. The stock, currently trading at $6.11, has seen its value decline by over 57% in the past year.
The downgrade reflects growing concerns about Sigma Lithium’s liquidity position following its second-quarter results, which revealed low cash balances and high days payable outstanding (DPOs). InvestingPro data confirms these concerns, showing a current ratio of 0.6 and short-term obligations exceeding liquid assets.
BofA Securities noted that Sigma Lithium recently terminated its relationship with its mining contractor, creating additional uncertainty regarding operations and financing that could heighten liquidity risks.
The investment bank expressed concern that lower mining activity resulting from the contractor change might lead to a production miss, despite management’s assurance that a new contractor would restart activities promptly.
BofA Securities also highlighted inflation in DPOs as a worrying sign that payments may have been deferred, potentially consuming a significant portion of any new financing the company secures.
In other recent news, Sigma Lithium Corp reported its Q2 2025 earnings, which showed a significant miss on both earnings per share (EPS) and revenue estimates. The company posted an EPS of -$0.17, far below the expected -$0.042, resulting in a 304.76% negative surprise. Additionally, revenue came in at $16.89 million, missing the forecast of $36.25 million by 53.41%. Despite these financial setbacks, BofA Securities has resumed coverage on Sigma Lithium with a Buy rating and a $12.00 price target, suggesting a potential 95% upside from current levels. BofA’s reassessment included adjustments for lower expected EBITDA for 2025-2027, delayed Phase 2 and 3 startups, and higher long-term mining costs. These developments highlight the challenges and opportunities facing Sigma Lithium in the near future.
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