In a report released yesterday, Lucas Pipes from B.Riley Financial maintained a Buy rating on Ferroglobe (GSM – Research Report), with a price target of $11.00.
Lucas Pipes has given his Buy rating for Ferroglobe PLC (GSM) due to a combination of factors. Firstly, despite a softer market outlook, Ferroglobe has shown solid results in the third quarter, which supports a high EBITDA estimate for the fourth quarter. This projection is largely due to expectations of increased working capital and a significant turnaround in free cash flow as inventories are reduced. Additionally, the company’s plans for capital returns, due to start in the second quarter, are seen as a positive sign. The company’s options for boosting financial flexibility, such as refinancing or negotiating amendments to senior bonds, further underpin this rating.
Secondly, despite near-term challenges in the silicon metal market, Ferroglobe’s strategic moves, such as its recent quartz mine acquisition and expansion into the solar value chain in Asia, are seen as beneficial for the company’s long-term prospects. The company’s vertical integration strategy is believed to enhance its earnings power and ability to capitalize on growth opportunities. Furthermore, a potential improvement in prices by 2024 and the company’s focus on the growing U.S. solar manufacturing industry, expected to increase significantly over the next few years, also contribute to Pipes’ positive outlook. Despite lowering volume estimates for silicon metal and ferrosilicon for 2024, the overall valuation of the stock still supports a Buy rating.
According to TipRanks, Pipes is a 5-star analyst with an average return of 16.6% and a 44.69% success rate. Pipes covers the Basic Materials sector, focusing on stocks such as Alpha Metallurgical Resources, Teck Resources, and Alcoa.
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Ferroglobe (GSM) Company Description:
Ferroglobe PLC is a holding company, which engages in the production of silicon and specialty metals. Its products include silicon metal, silicon-based alloys, and manganese-based alloys. It operates through the following segments: Electrometallurgy-North America, Electrometallurgy-Europe, Electrometallurgy-South Africa, and Other. The company was founded on February 5, 2015 and is headquartered in London, the United Kingdom.
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