5E Advanced Materials, Inc. (FEAM – Research Report), the Basic Materials sector company, was revisited by a Wall Street analyst today. Analyst Ben Kallo from Robert W. Baird downgraded the rating on the stock to a Hold and gave it a $3.00 price target.
Ben Kallo’s Hold rating on 5E Advanced Materials, Inc. (FEAM) is conditioned by several facets. FEAM’s recent financial reports indicate a heightened risk associated with the company’s debt covenant with its convertible debt holder. This agreement mandates that FEAM must maintain a cash reserve of $10 million to fulfill the covenant’s conditions. Although FEAM possesses other potential sources of funding, Kallo is hesitant given the prevailing interest rate climate, advising improved financial stability before becoming more assured.
Kallo is particularly focused on FEAM’s cash position and expenditure rate following the recent financial results. Despite a sequential decrease in total operating expenses, he perceives an increased risk of a possible violation of the debt covenant. While FEAM has entered into a provisional standstill agreement that permits a temporary dip below the required cash balance, Kallo remains cautious. He acknowledges the potential sources of capital available to FEAM, such as government grants, equity investments, and a possible buyout of convertible debt. Furthermore, Kallo appreciates the operational progress made at the Fort Cady project, viewing the commencement of operations as a possible near-term catalyst. However, these factors are not enough to offset the liquidity and execution risks, leading to his Hold rating.
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5E Advanced Materials, Inc. (FEAM) Company Description:
5E Advanced Materials Inc is engaged in the advanced materials with a focus on critical decarbonization applications, including electric transportation, clean energy, and food security.
Read More on FEAM:
- 5E Advanced Materials Signs Standstill Agreement with Lender
- UPDATE – 5E Advanced Materials Announces Successful Delivery of Step-Rate Testing Results
- 5E Advanced Metals announces successful delivery of step-rate testing results
- 5E Advanced Materials Announces Successful Delivery of Step-Rate Testing Results
- 5E Advanced Metals price target lowered to $4 from $5 at B. Riley
