UBS upgrades Sims to 'buy'
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The news: UBS analysts have upgraded Sims limited to a 'buy' as the scrap metal recycler might sell its UK metals unit for above book value.
The numbers: UBS analysts said they expect the Sydney-based company's UK metals business to be sold as part of a strategic review, with any sale likely to be above the $243 million book value.
UBS also hiked their earnings per share forecast for the 2025 financial year by 32%, as margin expectations for Sims' North America metals earnings increased.
Sims shares rose 4.5% to a high of $12.43 in morning trade, before lowering to $12.21, or 2.5% higher, by 12:25pm AEDT on the ASX.
The context: UBS analysts upgraded Sims to 'buy' from 'neutral' given the expected UK business sale. They also expect Sims to benefit from an improved scrap price and volume outlook, and a continued shift away from low-margin dealer-sourced volumes while securing more domestic buyers.
Meanwhile, Sims announced that its chair and independent non-executive director Geoff Brunsdon retired today. Philip Bainbridge has taken on the role of chair.
The source: UBS research
