Sims is capitalising on improved scrap prices, although Morgan Stanley finds it unclear just how much of the trading upgrade is driven by inventory. The company has guided to a substantial upgrade in EBIT, to $360-380m.
Strength is coming from intake volumes, and improving gross margins owing to higher scrap prices and inventory management.
Morgan Stanley raises FY21 EBIT forecasts by around 20% and lifts the target to $19.50 from $18.00. Equal-weight retained. The industry view is In-Line.
Target price is $19.50.Current Price is $17.05. Difference: $2.45 – (brackets indicate current price is over target). If SGM meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).