On Wednesday, UBS downgraded Boliden AB stock, a Swedish mining company, from Neutral to Sell, adjusting the price target to SEK 300.00. The firm's analysis suggests that despite the recent surge in Boliden's share price, there are several company-specific challenges that could affect its performance going forward.
The stock, which is listed on both the Stockholm Stock Exchange (BOL:SS) and over-the-counter (OTC: BDNNF), has seen a significant uptick of approximately 20% since its lows on September 24. This increase is attributed to a broader market rally in industrial metals and miners, spurred by stimulus announcements from China and Boliden's stronger-than-expected third-quarter results for 2024.
UBS acknowledges the positive market sentiment towards copper and to a lesser extent zinc, commodities that Boliden is involved in. However, the firm points out that Boliden is expected to encounter specific obstacles. These include lower ore grades at its Aitik and Garpenberg mines, an uncertain future for its Kevitsa mine, and reduced Treatment and Refining Charges (TCRCs) in its smelting operations. Additionally, potential risks associated with mergers and acquisitions are also a concern.
The firm's stance is that the market may not be fully accounting for the earnings pressures Boliden could face in 2025. With these factors in mind, UBS suggests that the recent rally in Boliden's share price presents an opportunity to reconsider a Sell position on the stock.
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