In a report released today, Kota Yuzawa from Goldman Sachs downgraded Sumitomo Metal Mining Co (STMNF – Research Report) to a Sell, with a price target of Yen3,100.00.
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Kota Yuzawa has given his Sell rating due to a combination of factors impacting Sumitomo Metal Mining Co. A significant reason is the global decline in demand for battery electric vehicles (BEVs), which has adversely affected the company’s earnings from its cathode materials and metals business. This downturn is reflected in substantial impairment losses in their Philippine nickel and cathode materials operations.
Additionally, legislative changes in the US and Europe regarding BEV sales and emissions regulations have further complicated the market landscape. The shift in battery technology from nickel-cobalt-aluminum oxide to nickel-manganese-cobalt oxide is also expected to challenge Sumitomo Metal Mining’s competitive position. Consequently, the analyst has lowered profit forecasts and reduced the target stock price, leading to a Sell rating. Potential risks that could alter this outlook include improvements in shareholder returns, rising metal prices, and a resurgence in BEV demand.