SELL BASF and Hensoldt? BUY Recommendation for Power Metallic Mines

Power Metallic Mines: 100% Upside Potential and More

Since late March, the shares of Power Metallic Mines have been in rally mode, rising from EUR 0.65 to EUR 0.94. From the analysts' perspective, the upside potential is far from exhausted, as the company is currently developing a large mineralized system in Canada. Analysts at GBC Research estimate the company's intrinsic value at approximately CAD 708 million and view the combination of high grades, multiple value-relevant metals, and positive metallurgical data as a strong foundation for the project's further development. In their latest update, the "Buy" recommendation was confirmed, and the price target was raised from CAD 2.85 to CAD 3.00 (EUR 1.88), representing 100% upside potential.

The main drivers of the analysts' optimism are the recent progress on the Lion project and the prospect of an initial resource estimate as early as this summer. According to the analysts' assessment, the company could thus transition from a pure exploration valuation to a resource-based valuation phase sooner than previously expected. The analysts view the new price target as a base-case scenario and not as an upper limit. Should the high-grade resource of 10–12 million tons with grades exceeding 5% copper equivalent, as expected by management, be confirmed, the analysts even consider a long-term project valuation of more than CAD 1 billion to be possible.

GBC particularly highlights the exceptionally high grade of the mineralization. In mining, high ore grades are considered a decisive economic factor, as they mean that smaller volumes of material need to be moved and processed to extract the same amount of metal. This could significantly reduce transportation, processing, and infrastructure costs and substantially improve a project's profitability. The latest drill results further support this assessment. For example, Power Metallic reported, among other things, 22 m grading 11.46% CuEqRec, 17.45 m grading 9.47% CuEqRec, and 39 m grading 5.66% CuEqRec. From the analysts' perspective, the high-grade intervals suggest that Lion could develop into a high-value core project within a larger mineralized district.

Analysts view the project's polymetallic structure as another key value driver. Lion is not merely a copper project but combines copper with palladium, platinum, nickel, gold, and silver. This could further increase the economic value per ton of ore. At the same time, the experts point to the positive metallurgical results obtained so far. Early closed-circuit flotation tests indicated high recoveries and high-grade copper concentrates. This means that a key issue in project development — the economic processability of the mineralization — has already been positively addressed at an early stage.

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Hensoldt: Stock Too Expensive?

Analysts at mwb research view Hensoldt's valuation critically. They therefore rate the stock as "Sell" and see its fair value at EUR 62. Although the company has a high-quality product portfolio, strong customer relationships, and a large order backlog, the experts believe the current valuation level is no longer justified. This is due in particular to the strong price performance of recent weeks, while other defence stocks have come under pressure following Rheinmetall's latest statements. Hensoldt shares have gained over 16% so far this year and are currently trading at EUR 89. Rheinmetall has lost over 22% of its value in 2026, and RENK has lost 8%.

mwb points out that Hensoldt remains heavily dependent on politically driven procurement cycles for tanks and armoured personnel carriers such as the Puma, Leopard, or Luchs. Budget reductions in this area could weigh on growth.

In addition, analysts have taken a close look at Hensoldt's increasing focus on "Software-Defined Defence" (SDD). Projects such as the partnership with Helsing, the BattleLab, or the collaboration with Schwarz Digits would make strategic sense and strengthen the company's positioning in the areas of digitalization and networked defence. Nevertheless, analysts do not yet see this as sufficient grounds for a significant valuation premium relative to the peer group. According to mwb's assessment, SDD itself is expected to account for less than 10% of consolidated revenue by 2030. From the experts' perspective, this means Hensoldt remains primarily a traditional defence contractor with a cyclical procurement profile rather than a tech company with structural growth characteristics.

On the other hand, analysts view the company's market position positively. Hensoldt is benefiting from rising NATO spending, growing demand for radar systems, electronic solutions, and drone defence, as well as additional opportunities in the aviation and air traffic control sectors. The acquisition of ESG also strengthens its position in the digitalization of modern battlefields. At the same time, however, the experts point to risks stemming from export restrictions, regulatory requirements, and heavy reliance on government defence budgets. In addition, competitors such as Lockheed Martin could be technologically superior.

Nevertheless, mwb expects Hensoldt to continue growing in the coming years. Following revenue of EUR 2.46 billion in 2025, revenue is projected to rise to approximately EUR 3.76 billion by 2028. Regarding EBITDA, mwb forecasts an increase from EUR 402 million in 2025 to EUR 773 million by 2028. Net income is expected to more than triple over the same period, from EUR 88 million to EUR 343 million. Despite this positive operating performance, analysts consider the current valuation of around EUR 10 billion to be too high by industry standards. While Rheinmetall is valued more favourably despite significantly higher growth rates, mwb believes that the risk of a potential downturn in the procurement cycle has so far been underestimated at Hensoldt.

BASF: 20% Downside Potential

"Buy" recommendation for Power Metallic, "Sell" recommendation for Hensoldt and what about BASF? If JPMorgan is to be believed, the chemical stock has a downside potential of a solid 20%. Although analysts have raised the price target from EUR 36 to EUR 40, the stock is currently trading at over EUR 50. JPMorgan rates the stock "Underweight." Overall, analysts see the European chemical industry facing challenging times. The structural problems of significant overcapacity and intense competition from Asia remain unresolved.

Most recently, BASF reported that it is advancing its "Winning Ways" transformation strategy for its core business. Following the largely completed spin-off of independently operating businesses, the "CoreShift" program is now set to reduce cash-based fixed costs in the core business by up to 20% by 2029 compared to 2024. The focus is on simplifying processes and organizations, adopting globally harmonized business processes, implementing standardized IT systems, and increasing the use of artificial intelligence. BASF continues to see significant growth potential in its core businesses — Chemicals, Materials, Industrial Solutions, and Nutrition & Care — which together generate approximately EUR 40 billion in revenue, and aims to increase profitability through greater competitiveness and stronger synergies.

JPMorgan is therefore clearly among the more bearish voices on BASF. According to marketscreener.com, 10 out of 21 analysts rate the stock a "Buy", 6 recommend "Hold," and 5 "Sell." Analyst price targets range from EUR 40 to EUR 65.

BASF's stock is trading at 2007 levels. This highlights the structural problems and suggests following JPMorgan's recommendation. For Power Metallic Mines, buying the stock before the resource estimate is released could be worthwhile. Based on the drilling results, this estimate should be strong and definitively position the company as one of the most exciting commodity explorers in the world. Hensoldt has held up well amid the recent sell-off in defence stocks. However, its growth still does not match its valuation.