Chart Update, page-2162

My 2c Gurkha:

I think the key thing is that it's a Price Target and not a Valuation (which, although I believe they use Discount Rates that do change, is less market focussed). Price Target is typically based on earnings or cash flow but I think they commonly use market metrics to turn it into an expected price over time. Those metrics (EV/EBITDA for capital intensive businesses or PE or P/FCF for others) are going to use what they see as what the market is willing to pay for these companies at a given level of EBITDA or NPAT in the current or prospective environment.

Bottom line: Simply the fact that the world is more uncertain and mining services are cyclical and multiples historically react badly to this means the target falls even if they think the EBITDA or NPAT will hold the same.

However, Price Targets are notoriously short sighted. Just look at how they played catch up with NRW for the last few years.

Personally, I think NRW extra potential strategic value related to the acquisitions, the infrastructure 'covid-boom' and China pumping its economy, are not really proven enough to get a look into any of those broker spreadsheets.

Just IMHO of course.

We've spent most of the last few years going 'jeez NRW is worth a lot more than this'. And we were right. And I suspect we will be right again when we look back in 12-18 months.

Cheers
pb