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Xstrata plc looks oversold say analysts
- Details
- Category: Commodities
- Published on Wednesday, 10 August 2011 10:25
Xstrata has the greatest leverage in the RBS mining coverage universe.
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Xstrata shares are currently at 970.
The reason behind the release of the note from RBS entitled "The Leveraged Play" is that Xstrata is looking oversold at current levels:
"Xstrata has the greatest leverage in our mining coverage universe. It is down 25% month to date and 37% year to date vs FTSE350 Mining Index down 20% mtd and 25% ytd. Unlike industrial metals, where prices have collapsed, coal prices remain firm: 27% of 1H earnings were from coal. Xstrata looks oversold."
According to analyst Nick Hatch Xstrata is due a strong second half to 2011:
"2H earnings should show an improvement on 1H as 2Q operational momentum (recovery from flooding in Queensland, for instance) continues to flow through and higher volumes and thus lower unit costs should protect earnings from lower commodity prices.
"The company has 22 major growth projects under development and expects to increase production volumes by 50% by 2014, with resultant unit cost declines. Net debt stands at US$8.1bn and net debt/net debt + equity is 15%."
Latest on The Economy News
- Euro pound exchange rate (EUR-GBP) finally breaks the shackles and surges; investors forecasting light inflation for longer
- Pound / Australian dollar FX rate at critical juncture: GBP hit by inflation data, AUD outlook hampered by 'dovish' RBA minutes
- Outlook for Bank of Ireland (ADR) and Banco Santander, S.A. (ADR) turning bearish: SAN and IRE charts suggest further gains will be increasingly hard to achieve
- British pound in fresh sell-off as short-term outlook deteriorates; Lloyds Bank forecast GBP to bounce back
- Outlook for Research In Motion Ltd and Nokia Corporation (ADR): BBRY sours, NOK set to continue a recent strong run higher
- G4S plc : GFS shares slump after firm start; but retain 18-month shallow rising support around 246p
- Forecasts for BP plc and Royal Dutch Shell Plc : RDSA and BP both tipped to yield further gains for investors on technical considerations, momentum waning
