Flat or up prices for things like bismuth, selenium, and cadmium should translate into results for 5N Plus (TSX:VNP), says Laurentian Bank Securities analyst Nick Agostino.
Next Tuesday, after market close, 5N Plus will report its Q1, 2017 results. Agostino expects the company will post EBITDA of (U.S.) $6.1-million on sales of $55.9-million, a topline the analyst notes would be down 13 per cent year over year, but up two per cent, quarter over quarter.
Agostino says he expects the improvement to be in-line with management’s stated expectations, but says there are a few things he will be watching closely.
“We look for colour on: 1) Status of commercial hedging programs with client contracts. 2) Update on 5N21 strategic plan regarding operational optimization and status of marginal businesses (contracts yielding <12% ROCE). 3) Status of mid-stream undifferentiated product portfolio and opportunities to further improve premiums on individual metals. 4) Status of value-add product portfolio and market opportunities,” says the analyst.
In a research update to clients today, Agostino maintained his “Buy” rating and one-year price target of $2.75 on 5N Plus, implying a return of 41.8 per cent at the time of publication.
Agostino thinks 5N Plus will generate EBITDA of $25.5-million on revenue of $225.5-million in fiscal 2017. He expects these numbers will improve to EBITDA of $27.0-million on a topline of $236-million the following year.