IGO shares fall further as Macquarie, Citi cut price targets
Make us a preferred source
Make us a preferred source on Google
The news: IGO extended losses on the ASX as analysts reduced their forecasts on the lithium and nickel miner, after its second-quarter result missed market estimates.
The numbers: IGO shares were down 3% to $4.91 by 12:30pm AEDT, having closed 1.8% lower on Thursday.
Macquarie lowered its price target on the stock by 2% to $5.80, while Citi's fell 1.9% to $5.30. Morgan Stanley ($4.50), UBS ($5.45) and Goldman Sachs ($5.60) kept theirs unchanged, while Morningstar reiterated its fair value estimate of $7 per share.
The context: Morningstar flagged that the core driver of profitability for IGO's part-owned Greenbushes site is the price of lithium, with realised spodumene prices softening further in the December quarter.
However, Morningstar sees "tentative signs" of improvement in the lithium market, with benchmark spot prices edging up in recent weeks.
UBS noted that it would "like to get more positive on IGO", with lithium prices "probably having bottomed". However, the stock's appeal is weakened by a softer outlook for the company's Nova mine and with its Kwinana operation facing a material write-down.
Meanwhile, Citi cut its price target, calling the result "overshadowed" by a net loss after tax and the issues at Kwinana. Macquarie trimmed its price target after adjusting for higher costs and a lower earnings outlook.
The sources: UBS research, Morningstar research, Morgan Stanley research, Macquarie research, Citi research, Goldman Sachs research
