Canaccord still sees "good potential upside" at Jubilee Metals

Canaccord Genuity has trimmed its target price for Jubilee Metals Group by 8% after the metals recovery company disappointed the market last week with its full-year results.

But the broker maintained a 'buy' rating, saying that it still sees upside to the stock even at the bottom end of its forecasts.

Jubilee, which retreats mining waste materials in key markets of South Africa and Zambia, said on 11 October that revenues for the year to 30 June were up 1% at £142m, while operating profits falling by around a third to £24.8m, as a result of a 22% reduction in the average platinum group metals (PGM) basket price to $1,262 an ounce.

Nevertheless, Canaccord said results were "in line to slightly better" than expectations and a "good results", especially considering the tough PGM pricing environment.

"We have lowered both our FY24 and FY25 EBITDA forecasts by 4-6% to reflect negative downward revisions in PGM prices [...] . However, the balance sheet for JLP remains strong for its modest growth ambitions," the broker said.

"We lower our target price on JLP by 8% to 12p (from 13p) which reflects our weaker earnings forecast near term."

However, looking forward, Canaccord said it expects a pick-up in earnings from the second half of the current fiscal year onwards, though "delivering on production guidance will remain a key focal point for investors in the coming quarters".

The broker said the range of fair value estimates for Jubilee now extends from 7p on the low end to as high as 17p over the longer term, and so provides "good potential upside to our revised target price".

The stock was down 3.4% at 5.7p by 1211 BST, taking the year-to-date fall to 46%.