Analyst Carlos De Alba from Morgan Stanley maintained a Hold rating on Nexa Resources SA (NEXA – Research Report) and keeping the price target at $7.00.
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Carlos De Alba has given his Hold rating due to a combination of factors affecting Nexa Resources SA. The ongoing wage negotiations between Nexa and the Cajamarquilla Zinc Refinery Workers Union have introduced uncertainty, as the union has called for a strike following unsuccessful talks. The potential for halted operations at the Cajamarquilla smelter, which is a significant contributor to Nexa’s zinc production, poses a risk to the company’s financial performance.
The smelter’s importance is underscored by its status as the only operating zinc smelter in Peru and its substantial contribution to Nexa’s zinc metal sales. Any disruption in its operations could lead to a notable impact on Nexa’s EBITDA, estimated at a 3% reduction for each week of halted operations. These factors contribute to a cautious outlook, justifying the Hold rating as investors weigh the potential risks against the company’s current market position.