July 23rd, 2024 | 06:50 CEST
70% with Evotec shares? Caution with BASF? Almonty Industries tempts investors to get in!
Will BASF miss market expectations in the second half of the year? Analysts believe so. The chemical giant's revenues are already expected to fall in the second quarter. So, should one sell the shares now? The Evotec share was bought yesterday. Analysts believe that the profit warning from Sartorius should not be overestimated and see over 70% upside potential. However, patience is required. The Almonty Industries share also appears too favourable. The commissioning of a huge tungsten mine is imminent, and not only companies such as Taiwan Semiconductor and Rheinmetall need the critical metal for their high-tech products. So, when will the share break out?
time to read: 3 minutes
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Author:
Fabian Lorenz
ISIN:
EVOTEC SE INH O.N. | DE0005664809 , BASF SE NA O.N. | DE000BASF111 , ALMONTY INDUSTRIES INC. | CA0203981034
Table of contents:
Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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Almonty Industries: When will the share break out?
What do Taiwan Semiconductor Manufacturing Company (TSMC) and Rheinmetall have in common? Both need tungsten. And that is not all: solar modules and vehicles also require the metal. Therefore, it is somewhat puzzling why tungsten remains under the radar for investors. Especially as a significant proportion of the supply is produced in China and Russia. Germany will, therefore, also have to think more about where tungsten will come from in the future. After all, it is not only semiconductors that will be increasingly produced in Germany in the future; the defense industry is also to be significantly expanded. Federal Minister for Economic Affairs Robert Habeck wants to push ahead with the construction of factories. Like LNG and wind power, the traffic light coalition wants to shorten authorisation procedures, among other things.
One way for investors to profit from the expected "battle for tungsten" is to buy Almonty Industries shares. The Company already operates mines in Spain and Portugal. However, things will only get really exciting in the second half of the year. The Sangdong mine in South Korea will finally go into operation in a few months. This will put Almonty in a new league and cause a stir worldwide. With Sangdong, the Company will become one of the largest tungsten producers in the Western world. Good contacts have already been established with the EU, the US Department of Defense and, of course, the government in South Korea.
While tungsten production is now imminent, Almonty laid the foundation stone for the downstream tungsten oxide plant a few days ago. The subsidiary Almonty Korea Tungsten Corp (AKTC) is to produce refined and melted tungsten and tungsten alloys there.
Almonty shares have been trading in a narrow corridor between EUR 0.40 and EUR 0.45 this year. Attempts to break out have yet to be successful. The closer the commissioning of Sangdong comes, the more likely the breakout is. With a market capitalization of just over EUR 100 million, the Company does not appear expensive. With Sangdong, Almonty's annual revenue could rise to over EUR 100 million.
BASF: Are market expectations too high for the second half of the year?
There can be no talk of a narrow corridor for BASF shares. The billion-dollar company's shares have been highly volatile, at the very least, since Russia's attack on Ukraine. Since the beginning of April, the share has lost around 20% in value and is currently trading at around EUR 45.
Due to the difficult economic situation, UBS believes there is a risk that the DAX-listed company could miss market expectations in the second half of the year. Nevertheless, the analysts have left their price target unchanged at EUR 58 and recommend BASF shares as a "Buy".
Warburg Research, on the other hand, has only issued a "Hold". The analysts expect BASF to report a decline in sales for the second quarter. Although sales volumes are expected to be okay, prices will be lower, and currency effects will be negative. The price target is EUR 50.
Evotec share with 70% potential?
Evotec shares have also been anything but boring this year. Unfortunately, the share price has fallen sharply overall. Several attempts to climb back above EUR 10 have failed. Yesterday, the biotech company's shares were again among the day's winners, rising over 4%.
On Friday, RBC commented favourably on Evotec. According to the analysts, the share has a price potential of around 70%. The profit warning from Sartorius would hardly allow any conclusions to be drawn about the development at Evotec. The "Outperform" rating and the price target of EUR 16 were therefore maintained. Warburg is even more optimistic. For the analysts, the fair value of the Evotec share is EUR 18. However, patience is required. A short-term price driver is missing. However, the latest partnerships are positive and the operating performance should improve again in the second half of the year.
Overall, Evotec remains a share not for the faint-hearted. The sideways movement of the Almonty share is tempting for entry. The tungsten share is actually too cheap, considering the start of production at Sangdong. BASF has not been convincing in recent years, and there are few reasons to believe this will change in the future.
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