RBC views Mineral Resources stock as capex reduction and cash flow focus strategy via Investing.com

On Friday, RBC Capital Markets updated its outlook on Mineral Resources Limited (ASX:MIN) (OTC: MALRF), raising the stock price target to AUD64.00 from AUD63.00, while reiterating an Outperform rating. This update follows the company’s recent announcement of an energy asset sale, which the analyst believes increases value and happened sooner than expected. The proceeds from this transaction are expected to be used to reduce the company’s debt.

The analyst noted that the first quarter results were broadly in line with expectations, but the key issues were the diversification of energy assets. The move is consistent with Mineral Resources’ 24-month strategy, which focuses on prioritizing the balance sheet, reducing capital expenditures, increasing production at the Onslow project, and operating assets to increase cash flow.

In addition to the asset sale, Mineral Resources also unveiled plans to scale back the Mt Marion underground project and implement other cost-cutting measures to keep operations closer to current market conditions. The analyst expects that the company’s peak level of maintenance will occur in the first half of fiscal year 2026 as capital costs decrease.

After incorporating these latest developments into their financial models, there have been minor changes to estimated earnings per share (EPS), but these changes have influenced the decision to raise the target price slightly to AUD64.00. The Outperform rating on Mineral Resources stock remains unchanged, indicating continued optimism in the company’s performance.

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