Diversified miner S32 rallied +4.7% on Monday, not a huge move considering its decline over the last two years. In February, S32 reported US$708m EBITDA, which was a slight beat on low expectations but not enough to arrest the stock’s weakness at the time. However, moving into 2H, we can see an improved picture with working capital unwinding, higher prices, lower costs and capex, plus volume growth – it all sounds too good. Still, we must not lose sight of the fact that the stock has aggressively re-rated on the downside, leaving room for bullish surprises.
- We like the risk/reward towards S32 initially targeting a test of $3.50 resistance or 10% higher.
MM is bullish towards S32 over the coming months
Add To Hit List
