RBC cuts Boliden to 'sector perform' as hedging not enough to give it edge

Boliden AB

01/12/2022 09:23

** RBC cuts the rating for the Swedish mine and smelter
operator Boliden  BOL.ST  to "sector perform" saying while the
company is well-hedged, the recent outperformance makes the
shares fairly valued
    ** The broker cites Boliden's counter-cyclical smelting
business and weaker Swedish crown as a potential natural hedge
in a downturn, adding that its electricity exposure is 80%
hedged for 2023/24 
    ** However, the company will be exposed to higher
inflationary and project execution risks compared to peers as
its biggest capital spend this cycle would be in 2023
    ** Therefore, RBC reduces its 2023 estimate for adjusted
EBIT by 11% based on inflationary pressures and lower medium
term grades at the Aitik mine 
    ** The broker cuts target price by 4.4% to SEK 325
    ** Boliden shares slip 1.25% to SEK 383 
 (Reporting by Agata Rybska)
 ((agata.rybska@thomsonreuters.com))