This report is an updated version of the report published on the 8 May 2023 at 4:50 PM GMT+10.
IGO Ltd (ASX: IGO)
IGO Ltd is an ASX listed mining entity that focusses on exploration, production, and development of nickel, lithium, copper, gold, and other products critical to clean energy. The Group is also focusing on renewable energy generation, electrification of transport, and energy storage through its upstream mining and downstream processing assets.
Investment Rationale – SELL at AUD 14.97
- Profit Booking: IGO’s stock price has breached the Resistance 2 level given in the resources main report on 15 March 2023, and presented a profit booking opportunity.
- Overvalued Multiples: On a 12-month basis, key trading multiples (EV/EBITDA, Price/Earnings, and Price/Cash Flow) are higher than the average for the Basic Materials sector.
- Technical Indicator: IGO’s stock price breached the upper Bollinger Band and trading in the overbought zone; and thus, price can face correction in the short-term.
- Macroeconomic Risks: IGO’s stock price is susceptible to the uncertainties around the interest rate hike, inflationary pressure on operating costs, uncertain demand prospects, subdued consumer disposable income, among others.
IGO Daily Chart
(Source: REFINITIV, Analysis by Kalkine Group)
Valuation Methodology: Price/Earnings Approach (FY24E) (Illustrative)
Considering that the notional gains, resistance levels, uncertain demand prospects, it is prudent to book profits at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 14.97 (as of 08 May 2023, at 2:00 PM GMT+10).
Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 8, 2023. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: Dividend Yield may vary as per the stock price movement.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.
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