On Friday, UBS analyst Daniel Major revised the firm's stance on Boliden AB (BOL:SS) (OTC: BDNNF), upgrading the stock from Sell to Neutral. Alongside the rating change, the price target was adjusted to SEK300.00 from the previous SEK320.00. The adjustment follows Boliden's challenges in mining and smelting operations, including increased capital expenditure and a delay in the start-up of the Odda smelter expansion.
Boliden AB has been navigating several obstacles, such as reduced treatment charges (TCs), volatility in zinc prices, and a significant capital expenditure announced for 2025, amounting to SEK13.5 billion. These factors are expected to constrain free cash flow generation and maintain elevated levels of net debt through 2025. The UBS analyst noted the lack of conviction that this would be the last increase in capital expenditure for Boliden.
Despite these challenges, the analyst acknowledged that the negative factors affecting Boliden are now better understood and reflected in the stock's price. Over the past two years, Boliden has underperformed in comparison to its base metal peers, and consensus earnings have seen significant downgrades.
The report also highlighted Boliden's potential turnaround story, which is contingent on improvements in mining grades and organic growth in smelter earnings, particularly from the Odda and Ronnskar operations. However, UBS does not anticipate these factors to significantly materialize over the next 12 months, which has informed their neutral position on the stock.
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