Oppenheimer Cuts Price Target on Ferroglobe plc (GSM) to $12; Reiterates Outperform
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Oppenheimer maintained an Outperform rating on Ferroglobe plc (NASDAQ: GSM), and cut the price target to $12.00 (from $14.00), following the company's 2Q earnings report. GSM reported revenues of $398M, down 6% sequentially from $423.5M. SiM prices for the quarter averaged $1.01/lbs, down from $1.08 realized in 1Q16.
Analyst Ian Zaffino commented, "Ferroglobe reported very weak 2Q16 results, with adjusted EBITDA of $17.2M, vs. our/Street estimates of $50M/$56M. We believe there were other one-time addbacks not called out, such as inventory losses, yield issues and power renegotiations in Venezuela, which would have helped EBITDA by $15M-$20M. Even so, results would still be below estimates, as SiM prices remain weak. EBITDA in 2017 could improve, as the post-merger Ferroglobe signs new contracts as a combined company, vs. bidding against itself. Lower 2016-17E EBITDA to $119M/$135M, from $174M/ $176M. Lower price target to $12 from $14 based on our reduced outlook."
Shares of Globe Specialty Metals closed at $9.40 yesterday.
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