On Friday, RBC Capital adjusted its outlook on Mineral Resources Limited (MIN:AU) (OTC: MALRF) shares, reducing the price target to AUD84.00 from the previous AUD85.00. Despite this change, the firm maintained its Outperform rating on the stock.
The revision follows the announcement of the Yilgarn hub's shutdown, which is anticipated to influence the company's EBITDA and earnings for FY25 and FY26. RBC Capital acknowledged the negative impact of the closure but also noted the relatively small size of the affected asset.
The firm suggests that this development could offer Mineral Resources an opportunity to reallocate its skilled workforce to more profitable assets, such as Onslow, potentially accelerating the growth of these projects.
The slight decrease in the price target to AUD84.00 reflects the expected effects of the Yilgarn shutdown. Nevertheless, RBC Capital's stance on Mineral Resources remains positive, citing several factors that contribute to their Outperform rating.
These include projected earnings growth from FY24 to FY26, production growth, a significant total shareholder return (TSR) implied upside, and a strengthening balance sheet following the recent Haul Road sell-down.
RBC Capital's analysis indicates confidence in Mineral Resources' ability to navigate the challenges posed by the Yilgarn hub shutdown. The firm believes that the company's strategic decisions and financial health will support its continued growth and performance in the market.
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