Which ASX 200 stocks with the biggest upside to analyst targets in August
West African Resources, Syrah and Silver Lake have the highest upside against analyst target prices.
Source: iStock
Mentioned
KEY POINTS
- Gold and beaten up battery metal stocks have the most upside against broker consensus
- Other notable names outside the top 10 include Paladin Energy, Qantas and Elders
West African Resources (ASX: WAF), Syrah (ASX: SYR) and Silver Lake (ASX: SLR) have the highest upside against consensus target prices – Unchanged from two weeks ago.
While companies including DeGrey (ASX: DEG), Nickel Industries (ASX: NIC) and Lynas Rare Earths (ASX: LYC) entered into the top 10 (stocks with most upside).
ASX 200 Stocks with the most upside
Ticker | Name | Close Price | 1-Month | Target price | Upside | Last Update |
|---|---|---|---|---|---|---|
West African Resources | $0.87 | 0.00% | $1.58 | 82.7% | 1/08/23 | |
Syrah Resources | $0.69 | -23.46% | $1.18 | 72.3% | 2/08/23 | |
Silver Lake Resources | $0.95 | -13.24% | $1.55 | 63.2% | 2/08/23 | |
Link Administration | $1.45 | -10.49% | $2.30 | 58.6% | 7/07/23 | |
De Grey Mining | $1.34 | -3.96% | $1.87 | 40.1% | 17/07/23 | |
Nickel Industries | $0.82 | -7.34% | $1.14 | 39.0% | 1/08/23 | |
Johns Lyng Group | $5.15 | -5.16% | $7.13 | 38.4% | 12/07/23 | |
Perseus Mining | $1.75 | 2.94% | $2.39 | 36.6% | 1/08/23 | |
Lynas Rare Earths | $6.69 | -6.30% | $9.13 | 36.5% | 1/08/23 | |
Life360 Inc | $7.64 | 1.19% | $10.28 | 34.6% | 31/07/23 |
‘Target price’ reflects an aggregate of all target prices within Refinitiv’s data base as at 04/08/2023. ‘Last Update’ reports the latest broker coverage on the stock – Stocks that have not received coverage in the past month are not included. Close price as at 04/08/2023 close (Table: Market Index | Source: Refinitiv)
The Case for West African Resources
West African Resources is a Burkina Faso-based gold producer – And that alone should tell us a few things:
It’s based on Africa – So it probably trades at a substantial discount to ex-Africa peers
The market often overlooks positive announcements such as guidance beats
On 25 July, West African reported its June quarter report, which also reaffirmed its 2023 guidance of 210,000 to 230,000 ounces of gold at an all-in sustaining cost of US$1,175 per ounce.
“WAF’s June quarter was broadly in line with our estimate with a modest production beat balanced by higher than expected costs. Importantly, WAF remains on track for CY23 guidance,” Macquarie analysts said in a note last month.
“Net cash of A$152 million was $11 million lower than we expected but was driven by a $13 million higher Kiaka spend.”
Macquarie says the stock trades at an EV/EBITDA of 2.3 – Or a 70-80% discount to names like Evolution Mining (ASX: EVN) and Northern Star (ASX: NST).
Catching Syrah’s Falling Knife
Shares in Syrah Resources are down almost 70% year-to-date after the company said it paused its Balama Operation in May and June due to volatile Chinese anode market conditions and high inventory levels.
Despite the stock’s downward spiral – Brokers remain adamant about its potential upside. And understandably so:
Natural graphite and anode material demand is expected to increase in the medium-to-long term on EV demand
Syrah is the only operating vertically integrated natural graphite supplier outside of China
Syrah is building an 11,250 tpa active anode material facility in the US with commercial arrangements in place with tier 1 customers
But what’s the right price for a downward spiraling stock?
Macquarie says Syrah faces a US$100m funding gap for its Vidalia anode facility in the US. The analysts assume the shortfall will be funded via an equity raising in the first quarter of 2024. That’s a lot of dilution for the $460m market cap company.
Honourable mentions
These are the stocks ranked 11-20 for most upside vs. consensus targets.
Ticker | Name | Close price | 1-Month | Target price | Upside | Last Update |
|---|---|---|---|---|---|---|
Chalice Mining | $5.89 | -2.64% | $7.89 | 34.0% | 27/07/23 | |
Champion Iron | $5.74 | -0.86% | $7.50 | 30.7% | 31/07/23 | |
Paladin Energy | $0.78 | 3.33% | $1.01 | 30.3% | 2/08/23 | |
Qantas Airways | $6.38 | 3.57% | $8.26 | 29.5% | 19/06/23 | |
Nufarm | $5.20 | 0.78% | $6.73 | 29.4% | 6/07/23 | |
Insignia Financial | $2.89 | 3.58% | $3.74 | 29.4% | 1/08/23 | |
Regis Resources | $1.61 | -16.19% | $2.05 | 27.7% | 31/07/23 | |
Elders | $7.29 | 4.89% | $9.31 | 27.7% | 27/06/23 | |
Karoon Energy | $2.24 | 10.89% | $2.86 | 27.7% | 2/08/23 | |
The Star Entertainment | $1.02 | -2.87% | $1.29 | 27.1% | 13/07/23 |
‘Target price’ reflects an aggregate of all target prices within Refinitiv’s data base as at 04/08/2023. ‘Last Update’ reports the latest broker coverage on the stock – Stocks that have not received coverage in the past month are not included. Close price as at 04/08/2023 close (Table: Market Index | Source: Refinitiv)
