Jefferies rates Australia's Sims Ltd as 'underperform'; cuts PT

Sims

17/09/2023 20:25

** Analysts at Jefferies say there are major risks to
forecasts for Sims Ltd  SGM.AX  include volatile prices for
metals, volatile sales demand and management exceeding
expectations in regard to achieving targeted profitability.
    ** Brokerage rates shares as "underperform", reduces price
target by 5% to A$13.14.
    ** Jefferies says FY24 will be an important year to measure
progress at SGM given the ambitious FY25 targets.
    ** "We see strategic merit in the business and the growth
opportunity around active service participation in an
increasingly closed loop cloud" - Jefferies.
    ** Analysts say hitting a FY25 target of A$8.5 million
repurposing of IT and server components (RPUs) and  A$37.5
million in earnings before interest and tax (EBIT) requires
material improvement in earnings and a tight reign on capex
under new return on productive assets (ROPA) hurdles.
    ** SGM stock up 5.4% this year, as of last close.

 (Reporting by Shivangi Lahiri in Bengaluru, Editing by Louise
Heavens)
 ((Shivangi.Lahiri@thomsonreuters.com;))