Canaccord Genuity maintained a Buy rating on Imdex Limited (IMD:AU) (OTC: IMDXF) and raised the price target to AUD2.67 from AUD2.25. The firm's analysis acknowledges Imdex's performance amidst a downturn in the mineral exploration industry.
Despite a 25% global reduction in drill holes for the September quarter compared to the prior corresponding period (pcp), Imdex reported a revenue decrease of only 11% versus pcp, marking a 3% quarter-over-quarter increase.
Imdex's relative outperformance is noted at a time when the company is showing positive margin signs, and the exploration market is beginning to show signs of recovery. The firm's commentary suggests Imdex's current valuation is not considered particularly low based on fiscal year 2025 (FY25) projections, but anticipates a return to higher growth levels in fiscal year 2026 (FY26).
The company's forward price-to-earnings (PE) ratio for FY26 stands at 16.6 times, which Canaccord Genuity believes offers room for potential multiple expansion alongside anticipated acceleration in earnings growth. The upgrade in Imdex's price target reflects the firm's confidence in the company's future performance and the expected positive trajectory of the exploration market.
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