Upgrades to commodity price estimates have driven a 5% upgrade to the valuation of Sandfire Resources. UBS observes the valuation is very sensitive to near-term commodity assumptions because of the 3-4 years of remaining mine life at DeGrussa.
Management is trying to extend life through regional exploration. While the stock now trades in line with UBS valuation the broker suggests there is risk of M&A. Rating is upgraded to Neutral from Sell and the target raised to $7.00 from $6.70.
Sector: Materials.
Target price is $7.00.Current Price is $6.77. Difference: $0.23 – (brackets indicate current price is over target). If SFR meets the UBS target it will return approximately 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
