On Friday, Jefferies reiterated its Buy rating on Mitsubishi Materials (5711:JP) (OTC: MIMTF) stock, maintaining a price target of JPY3,500.00.
The firm's analysis acknowledges the aggressive revenue projection (RP) guidance of JPY63 billion, which anticipates a significant recovery in copper product volume, projecting an increase of 19% year-over-year. Despite these expectations, current shipment levels have been weak, and the company has been losing market share to competitors like DOWA.
The guidance also includes an anticipated volume recovery in metalworking, expected to contribute an additional JPY5.7 billion. However, shipments in this sector have continued to be sluggish.
Additionally, dividends from the Los Pelambres mine, which Mitsubishi Materials relies on, are not projected to arrive until the October-December quarter, potentially posing earnings risks in the first half of the year.
Despite these concerns, Jefferies remains optimistic about Mitsubishi Materials' future, citing ongoing turnaround efforts and a strategic focus on copper, particularly with the expansion of the Mantoverde and Los Pelambres mines. The firm's stance reflects a cautious but positive outlook on the company's near-term earnings potential.
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