On Monday, Nomura/Instinet adjusted its stance on Ecopro BM Co Ltd (247540:KS) shares, shifting the stock's rating from Buy to Neutral. This change comes with a revised price target set at KRW240,000, down from the previous KRW290,000. The adjustment reflects a more cautious outlook on the company amidst industry challenges.
The analyst from Nomura/Instinet cited several factors influencing the downgrade. A key concern is the ongoing downturn in the battery and cathode industry, characterized by weak demand and increased competition. This challenging environment has prompted the firm to lower its capacity forecasts for Korean cathode manufacturers by an average of 27% for the period from 2024 to 2030.
Despite the broader industry headwinds, Ecopro BM had previously been seen as favorably positioned to benefit from a potential recovery due to its capacity expansion efforts. The company's strategy, which includes metal integration, and an improved balance sheet, were factors that had initially led to a Buy rating.
However, the current market conditions have led to a more conservative outlook for Ecopro BM, contrasting with the analyst's view on LG Chem (051910:KS), which maintains a Buy rating. LG Chem is perceived to have better prospects for investment, sales, and profitability, especially given its relationship with LG Energy Solution (373220:KS), which is also rated as Buy.
The revised stock price target and rating reflect a recalibration of expectations for Ecopro BM in light of the persistent industry downturn and competitive pressures. The company's specific circumstances and broader market trends have been carefully considered in Nomura/Instinet's updated analysis.
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