Berenberg lowers target price on Atalaya

Analysts at Berenberg lowered their target price on Atalaya Mining from 400.0p to 370.0p on Wednesday after the group's second-quarter results fell short of expectations.

Berenberg noted that Atalaya's management had given advance warning that its second-quarter trading performance was likely to be the weakest of the year, but said the results released still came in "meaningfully below" its expectations.

"Revenues of €93.4m missed our €103.8m estimate due to a provisional pricing adjustment of €10.0m. EBITDA of €14.7m missed our €43.6m estimate due to lower revenues and higher-than-expected operating costs. As a result, C1 cash costs of $3.12 per pound missed our $2.82/lb estimate, and all-in sustaining costs of $3.33/lb also missed our $3.08/lb estimate," said Berenberg.

The German bank, which reiterated its 'buy' rating on the stock, also said Atalaya's lower interim dividend of $0.036 per share was likely to "disappoint" the market.

However, Berenberg said it continues to believe that the market does not ascribe value to the company's "compelling growth portfolio" and that its current valuation was "attractive" for a copper miner with "a significant growth portfolio" standing at the cusp of the energy transition.

"2022 is likely to remain challenging for the shares, but upcoming catalysts and an improving electricity picture should help to drive a re-rating in 2023," concluded the analysts.

Reporting by Iain Gilbert at Sharecast.com