Morgans initiates coverage of Stanmore Resources with an Add rating and $3.80 target price. The recent announcement to acquire BHP Group’s ((BHP)) 80% interest in BHP Mitsui Coal lifts the company’s metallurgical coal production to number seven globally.
The broker suggests the transaction transforms Stanmore Resources’ operating scale and risk profile and there is now dividend upside potential. It’s thought a smooth integration of BHP Mitsui Coal will pave the way for more coal sector acquisitions.
Target price is $3.80.Current Price is $2.65. Difference: $1.15 – (brackets indicate current price is over target). If SMR meets the Morgans target it will return approximately 30% (excluding dividends, fees and charges – negative figures indicate an expected loss).