Stifel has issued a downgrade for Eramet (ERA: FP) (OTC: ERMAY), shifting the stock's rating from Buy to Sell and significantly reducing the price target to EUR45.00 from EUR150.00.
The downgrade comes just before Eramet is set to release its quarterly sales figures, during which the mining group has pre-emptively announced substantial downward revisions to its manganese ore and nickel production targets.
The analyst from Stifel noted that these lowered projections, coupled with the decline in manganese prices, necessitated a steep downward revision of earnings estimates. The situation is compounded by a change in the company's growth profile.
Previously perceived as a growth entity due to its mining expansion projects, Eramet now faces a halt in these plans due to severe challenges in the property and steel sectors in China and a more stringent mining policy in Indonesia.
Moreover, the expected resumption of manganese production by Eramet's competitor, South32 (OTC:SOUHY), within the next 6 to 9 months is projected to put additional pressure on manganese prices and Eramet's shares.
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