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UBS downgraded Merdeka Battery Materials Tbk PT (MBMA:IJ) stock rating from Buy to Neutral on Thursday, while slightly raising its price target to IDR510.00 from IDR505.00.
The downgrade follows a significant 31% outperformance by Merdeka Battery Materials shares compared to the Jakarta Composite Index over the past month, which UBS indicates has diminished the stock’s risk-reward profile.
UBS noted that it still views favorably the company’s potential to deliver the strongest EBITDA growth in its sector over the next 3-4 years, citing Merdeka’s "multiple unique partnerships with strong Chinese nickel partners and new project ramps."
The investment bank highlighted Merdeka Battery Materials’ "solid nickel upstream assets and integrated operation" as key strengths that shield the company from premium pricing pressures caused by tight ore supply.
Despite maintaining a positive outlook on the company’s fundamentals and slightly increasing the price target, UBS determined that the recent stock appreciation has fully valued these growth prospects, prompting the downgrade to Neutral.
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