On Tuesday, JPMorgan issued an updated research note on Sibanye-Stillwater (SGL:SJ) (NYSE: SBGL), reducing the mining company's share price target to ZAR2,300 from ZAR2,600. The firm maintained a Neutral stance on the stock. The adjustment follows Sibanye's full-year 2023 results, which did not meet the earnings expectations previously set by JPMorgan.
The revision in the price target reflects the firm's analysis of Sibanye's newly released full-year 2024 production, cost, and capital expenditure guidance. This new information has led to a reduction in estimated earnings before interest, taxes, depreciation, and amortization (EBITDA) for the years 2024 and 2025 by 16% and 13%, respectively, compared to previous forecasts.
The report from JPMorgan indicates that the decision to lower the December 2025 price target to ZAR23 per share, down from ZAR26, is partly due to altered medium-term production and cost assumptions. These changes suggest that the production might be lower and costs higher than what was previously anticipated.
According to JPMorgan's evaluation, Sibanye-Stillwater is currently trading at 4.3 times and 3.2 times its expected 2024 and 2025 enterprise value to EBITDA (EV/EBITDA) multiples. The firm also noted the stock's free cash flow yield, which stands at -5% for 2024 and 13% for 2025.
The report concluded with JPMorgan reiterating its Neutral rating on the shares of Sibanye-Stillwater. The rating reflects the firm's stance based on the latest financial projections and market evaluations.
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