UpdatedUBS rates PEM as Upgrade to Buy from Neutral - The broker has lowered its target price to $3.05 from $3.35 after downgrading FY08 net profit by 48% and FY09 by 18%. This comes after factoring in the company’s weaker production guidance and lower short-term zinc prices into its valuation.
UBS has, however, upgraded the rating to Buy from Neutral as it believes that much of the risk with Broken Hill’s operating performance has been priced in to the share price.
Still, the broker has reiterated that the company remains a higher risk play and a steady operating performance at Broken Hill would be needed to drive the stock higher.
Target price is $3.05 Current Price is $2.19 Difference:$0.86 - (brackets indicate current price is over target). If PEM meets the UBS target it will return approximately 39% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June. UBS forecasts a full year FY08 dividend of 8.00 cents and EPS of 26.00 cents. At the last closing share price the estimated dividend yield is 3.65%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.42.
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