March 22nd, 2022 | 12:31 CET
Analysts enthusiastic about S&T, Rheinmetall and Phoenix Copper - TUI share under review
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"[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper
Phoenix Copper: Analysts see more than 100% price potential
SISM Research sees considerable upside potential for the Phoenix Copper share and recommends it as a buy. The analysts' price target for the commodity explorer is EUR 1.72, with the share currently trading at around EUR 0.60 on the Frankfurt Stock Exchange. From the analysts' point of view, Phoenix is well-financed and led by a very experienced management team. The conditions are good for the flagship Empire Project to go into production, probably by mid-2023. There, Phoenix Copper focuses primarily on the open-pit copper oxide deposit. The production plan calls for 14.32 million tons of oxide ore to be produced in the first seven years. The Company expects average annual production of 8,550 tons of copper and 1,970 tons of zinc in the first production phase and 17,235 ounces of gold and 680,050 ounces of zinc in the second phase. Accordingly, the investments could be recouped in less than two years.
Overall, there is enormous long-term potential to develop a world-class copper and precious metals mine at the Empire Project by extracting the sulfide body beneath the oxide layer and adjacent claims. Should further exploration drilling reveal a significant sulfide copper resource below the open pit at the Empire Project, this could significantly impact SISM's valuation. In addition, exploration work is ongoing at Red Star and the Navarre Creek Gold Project. Cash flow generated from the Empire mining project will enable further development of these projects. Cobalt mining in Idaho is booming. With two highly prospective copper-cobalt concessions, Phoenix Copper is excellently positioned to benefit from the rapidly growing demand for raw materials to build electric vehicles, smartphones, tablets, etc.
S&T: Forecast and dividend convince analysts
One of the day's winners in the SDAX yesterday was S&T. The IT service provider from Austria increased sales from EUR 1.25 billion to EUR 1.34 billion in 2021. EBITDA fell from EUR 130 million to EUR 126 million. Net profit also declined from EUR 56 million to EUR 48 million. A dividend increase from EUR 0.30 to EUR 0.35 per share for the past fiscal year will be put to the vote at the Annual General Meeting. The order backlog increased significantly from EUR 0.93 billion to EUR 1.33 billion. The outlook was also positive in other respects. Despite a foreseeable loss of sales in Russia - about 5% of group sales - due to the Ukraine war, S&T is optimistic for the current year. Additional orders are expected in the areas of cybersecurity and armaments. For 2022, CEO Hannes Niederhauser expects an overall increase in sales to "at least" EUR 1.5 billion. In January, the forecast was still "around" 1.5 billion. Initial reactions from analysts were positive. Jefferies, Hauk & Aufhäuser and Warburg confirmed their buy recommendations yesterday. At EUR 32, Jefferies has the highest price target for the S&T share. The key data has been confirmed, and the accusations of the short-seller Viceroy have been refuted. The S&T share is currently trading slightly above the EUR 15 mark.
Rheinmetall: Analysts expect up to EUR 210
The top performer in the MDAX yesterday was Rheinmetall. The stock has gained momentum due to Russia's attack on Ukraine and the related armament build-up in Europe. Due to the emerging flood of orders, the armaments group has raised its growth forecast for the current year from 8-10% to now 15-20%. The operating return on sales is also expected to rise slightly from 10.5% to 11%. As a result, Warburg and Morgan Stanley analysts see further potential for the Rheinmetall share and have raised their price targets. Morgan Stanley from EUR 178 to EUR 191 and Warburg from EUR 200 to EUR 210. According to the Warburg analyst, German defense investments should already have a noticeable impact on Rheinmetall's performance in the current year. On Friday, Deutsche Bank raised its price target for Rheinmetall shares from EUR 120 to EUR 190.
TUI rated as "underperformer"
TUI Germany CEO Stefan Baumert is optimistic about the critical 2022 summer season: "There are many indications that we will see a summer business this year that will approach or even reach the pre-pandemic level. We see a very high backlog." So far, he said, there has been no discernible fundamental change in customer booking patterns due to the war in Ukraine. However, the war has had an impact on TUI's shareholder structure. It was reported that the EU-sanctioned oligarch Alexei Mordashov has largely transferred his TUI shares to his wife. According to TUI, the German Federal Ministry of Economics and Technology is investigating whether the complicated reallocations were done legally. Irrespective of this, Jefferies is not convinced by the TUI share. The analysts have confirmed their "Underperform" recommendation for the tourism group. The price target is EUR 2.10.
Analysts move the prices. Phoenix Copper seems to have attractive projects, while S&T and Rheinmetall are also convincing. Analysts are not yet convinced about TUI.
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