Analyst Heiko Ihle from H.C. Wainwright reiterated a Buy rating on Largo Resources (LGO – Research Report) and increased the price target to $4.70 from $4.60.
Heiko Ihle has given his Buy rating due to a combination of factors that suggest potential for Largo Resources despite some recent challenges. The company’s production in the first quarter of 2024 was within the upper end of its guidance range, despite an overall decrease in year-over-year production due to planned maintenance activities. Moreover, Ihle sees the company’s strategies to reduce costs and increase efficiency, such as lowering contractor headcount and focusing on high-return projects, as positive steps that could counterbalance current lower grades and higher silica levels in the ore being processed.
Furthermore, the report indicates that Largo’s plans to enhance its crushing capacity and improve its titanium dioxide grades by increasing ilmenite production are viewed as a means to boost future performance. Ihle’s revised price target for Largo Resources also reflects a reduction in future capital expenditures and a valuation based on a discounted cash flow analysis of the Maracás Menchen Mine. By including the company’s cash balance and subtracting its debt, Ihle arrives at a net asset value estimate that supports his Buy rating and slightly increased price target.
According to TipRanks, Ihle is an analyst with an average return of -2.8% and a 43.31% success rate. Ihle covers the Basic Materials sector, focusing on stocks such as Avino Silver & Gold, MAG Silver, and Gold Royalty.
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Largo Resources (LGO) Company Description:
Largo Resources Ltd. engages in the exploration and development of vanadium and tungsten projects in Brazil and Canada. It focuses in the production of vanadium flake, purity vanadium flake and purity vanadium powder. The firm also holds interest in the maracás vanadium, currais novos tungsten tailings and campo alegre de lourdes iron-vanadium projects; and in northern dancer tungsten-molybdenum property located in the Yukon Territory. The company was founded on April 18, 1988 and is headquartered in Toronto, Canada.
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