Goldman Sachs has adjusted its price target for Deterra Royalties Ltd (DRR: AU), reducing it to AUD4.60 from the previous AUD4.70. The firm has maintained a Buy rating on the stock. This change follows the release of the company's financial results for the fiscal year 2024, which reported underlying EBITDA/NPAT at A$228 million/A$155 million, showing a slight decline compared to Goldman Sachs estimates, by 1% and 3% respectively.
Deterra Royalties declared a final dividend of A14.4 cents per share, which reflects a 100% payout, although this was slightly below Goldman Sachs' expectation of A15.3 cents per share. The royalty revenue figures had been pre-reported prior to this announcement.
The company is currently concentrating on finalizing the Trident acquisition and is actively evaluating a range of other acquisition opportunities. These include both primary and secondary royalties, with a focus on investments valued between A$100 million and A$300 million.
The targeted assets are within the bulks, base metals, and battery materials sectors, located across Australia, the Americas, and Europe.
Deterra Royalties is in a strong financial position with approximately A$30 million in net cash and access to an A$500 million credit facility. However, Goldman Sachs projects that the company's gearing will significantly increase from a net cash position to over 50% following the Trident acquisition. This is notably higher than the company's stated target gearing range of 0-15% through economic cycles.
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