On Monday, BMO Capital Markets adjusted its outlook on Petra Diamonds Ltd. (PDL:LN) (OTC: PDMDF), reducing the price target to GBP0.35 from the previous GBP0.45. The firm continues to hold a Market Perform rating on the company's shares.
The revision follows Petra Diamonds' announcement of its Fiscal Year 2025 Tender 3 sales results. The company reported a 7% decline in like-for-like rough diamond prices compared to the first two tenders of the fiscal year, which occurred earlier in October 2024. This downward trend reflects broader industry challenges, prompting Petra Diamonds to revise its diamond pricing assumptions downward for all operations in FY2025.
In response to the sustained industry downturn, Petra Diamonds has embarked on a restructuring process aimed at reducing costs across its group. The company is engaging in consultations as part of this restructuring effort. Additionally, Petra Diamonds has decided to postpone the refinancing of its 2L Notes until the calendar year 2025, a move that further indicates the company's cautious approach in the face of market headwinds.
The BMO Capital analyst commented on the situation, stating the impact of these developments is negative. Despite the reduction in the price target, the analyst has chosen to maintain the Market Perform rating, indicating a neutral stance on the stock's future performance.
The new price target of GBP0.35 per share reflects the lowered expectations and the current challenges faced by Petra Diamonds. The company's restructuring and cost-cutting measures are a direct response to the ongoing weakness in the diamond industry, which has affected pricing and financial strategies.
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