Tuesday, H.C. Wainwright adjusted its outlook on Electra Battery Materials Corp. (NASDAQ:ELBM), lowering the price target to $1.40 from the previous $1.60 while sustaining a Buy rating on the stock. The firm's decision follows the release of Electra's first-quarter financials for 2024, which were made public last Sunday, May 22, 2024.
Electra Battery Materials, which is currently in the pre-production phase, reported a first-quarter net loss of C$12.2 million, or C$0.22 per share. This marks an improvement compared to the C$20.3 million loss, or C$0.57 per share, recorded in the same quarter of the previous year. The year-over-year reduction in net loss is primarily attributed to a C$6.8 million loss connected to the financial liability of the company's convertible notes, a notable decrease from C$14.9 million in the first quarter of 2023.
The company also experienced a decrease in operating loss, which fell 12% year-over-year to C$3.3 million. This decline is largely due to reduced staffing levels, which led to a decrease in general and administrative expenses to C$0.5 million from C$0.9 million, and salaries and benefits to C$0.9 million from C$1.3 million. However, these savings were somewhat offset by a rise in consulting and professional fees to C$1.1 million from C$0.6 million.
Looking forward, H.C. Wainwright anticipates that Electra's management will continue to seek additional efficiencies as the company evaluates funding options for its cobalt sulfate refinery. The firm reiterated its Buy rating on Electra Battery Materials despite the revision of the price target.
InvestingPro Insights
As Electra Battery Materials Corp. (NASDAQ:ELBM) navigates its pre-production phase, recent data from InvestingPro underscores the challenges it faces. With a market capitalization of $26.69 million, the company operates under a significant debt burden and is quickly burning through cash. The InvestingPro Tips highlight that Electra suffers from weak gross profit margins and its short-term obligations exceed its liquid assets, which may raise concerns about financial stability in the near term. Additionally, analysts do not expect the company to be profitable this year, and Electra does not pay dividends to shareholders, which could influence investment decisions.
The company's P/E ratio stands at -0.57, reflecting its current lack of profitability, and the adjusted P/E ratio for the last twelve months as of Q1 2024 is -2.99. Despite a notable EBITDA growth of 26.64% during the same period, Electra's return on assets was -32.46%, indicating that the company has struggled to efficiently leverage its asset base to generate profits. Moreover, the price of Electra's stock is currently at 17.93% of its 52-week high, with a previous close at $0.48.
Investors interested in a deeper analysis of Electra Battery Materials can explore additional InvestingPro Tips, with a total of 7 tips available to provide a more comprehensive understanding of the company's financial health and market position. For those considering an InvestingPro subscription, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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