Orica Limited (OCLDF) has received a new Buy rating, initiated by Goldman Sachs analyst, Niraj Shah.
Niraj Shah has given his Buy rating due to a combination of factors which demonstrate Orica Limited’s strong performance and potential for growth. Shah notes that Orica Limited has shown robust commercial discipline, with a significant year-over-year increase in earnings before interest and taxes (EBIT) per ton, even after accounting for turnaround costs. This disciplined performance is set against the backdrop of a re-pricing cycle that has seen a substantial shift in domestic ammonium nitrate pricing. While this cycle is nearing its conclusion, a balanced market is anticipated to support additional incremental gains, which would be bolstered by the adoption of higher value blasting technologies.
Furthermore, Shah believes that Orica’s recent acquisitions, such as those in Sodium Cyanide and Digital solutions, enhance the company’s ability to capture a greater share of customer spending. Adjustments in earnings expectations to reflect underlying trends and the impact of acquisitions like Terra and Cyanco have also been factored into the rating. Shah’s target price for Orica is rooted in a balanced evaluation that combines discounted cash flow (DCF) and enterprise value-to-EBIT analyses, indicating an approximate 15% upside potential compared to the median upside for their coverage universe. This comprehensive approach underpins the confidence in the reinstated Buy rating for Orica Limited’s stock.
In another report released on May 10, Macquarie also maintained a Buy rating on the stock with a A$20.05 price target.
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
Orica Limited (OCLDF) Company Description:
Orica Ltd. engages in the manufacture and distribution of commercial explosives and blasting systems. It operates through the following segments: Australia, Pacific, and Asia; North America; Latin America; Europe, Middle East, and Africa; Minova; Auxiliaries; and Global Support. The Australia, Pacific, and Asia; North America; Latin America; and Europe, Middle East, and Africa segment involves in the supply of commercial explosives and blasting systems including technical services and solutions to the mining and infrastructure markets, and supply of mining chemicals including sodium cyanide for gold extraction. The Minova segment provides chemical and mechanical earth control products, adhesives, and ground support solutions for the underground mining, construction, tunneling, and civil engineering industries. The Auxiliaries segment consists of all adjacency businesses. The Global Support segment relates to corporate and support costs which cannot otherwise be allocated to other segments on a reasonable basis and operation of the Botany Groundwater Treatment Plant and non-operating assets. Its products include BlastIQ Plattform and mining chemicals such as sodium cyanide and emulsifiers. The company was founded in 1874 and is headquartered in Melbourne, Australia.
