Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
JPMorgan took a bearish stance on Boliden AB (BOL: SS) (OTC: BDNNF), downgrading the stock from Neutral to Underweight and slightly reducing the price target to SEK300.00 from the previous SEK305.00.
The revision in the mining company's outlook is primarily due to expectations of an impending zinc surplus, which is anticipated to affect Boliden's financial performance given its significant exposure to zinc.
According to JPMorgan's commodities research, the zinc market is predicted to shift from its current deficit to a surplus by the year 2025. This market change is significant for Boliden AB as zinc plays a crucial role in its operations.
The firm's earnings are highly sensitive to zinc price fluctuations, with a 10% change in the zinc price potentially affecting the company's earnings before interest and taxes (EBIT) by approximately 8%.
The new forecast suggests that Boliden AB might face challenges with generating free cash flow (FCF) in 2025, a key metric for investors gauging the financial health and performance of a company.
The projection of a free cash flow negative year has contributed to the downgrade of Boliden's stock to Underweight, indicating that JPMorgan sees the company's stock as potentially underperforming in comparison to the broader market or its sector peers.
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