On Wednesday, Roth/MKM adjusted its stance on Filo Mining Corp (FIL:CN) (OTC: FLMMF) stock, downgrading the from Buy to Neutral. The firm set a price target for Filo Mining at C$33.00, aligning with the cash portion of a recent transaction.
The move reflects the analyst's view that the current offer on the table, which is consistent with the stock's present value, is unlikely to be exceeded by other potential buyers.
The analyst explained the rationale behind the downgrade, noting that the stock's current share price of C$32.00 is closely matched with the proposed transaction value. The previous Buy rating was influenced by the anticipation of a buyout, with BHP and Lundin Mining (OTC:LUNMF) being considered the most probable acquirers of Filo Mining. Given this context, the analyst believes that it is improbable for another company to propose a higher bid.
The price target of C$33.00 is based on the cash component of the transaction in question, which the analyst believes fairly represents the value of Filo Mining's shares. The decision to downgrade to Neutral suggests that Roth/MKM sees limited upside potential from the current share price level, taking into account the specifics of the deal.
The commentary from the analyst indicates a shift in expectations, moving away from the possibility of a competitive buyout scenario. With the two front-runners for acquisition already identified, the market is not expected to see a bidding war for Filo Mining.
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