After a brief hiatus from coverage, Morgans takes another look at Western Areas and derives a target price of $2.96, with an Add rating.
The broker notes the share price has pulled back sharply on weaker than anticipated second quarter production following on from a soft first quarter.
While the analyst anticipates production volatility in the short term from the ageing Forrestania operations, the medium-term upside from Cosmos and strengthening nickel price is considered exciting.
Morgans sees the company well placed to benefit from the EV/battery thematic because it is a pure nickel play that is already in production. It’s also considered to have a large resource base, with development underway as well as growth potential.
Sector: Materials.
Target price is $2.96.Current Price is $2.44. Difference: $0.52 – (brackets indicate current price is over target). If WSA meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges – negative figures indicate an expected loss).
