Mid-Cap

One Gold Stock May Face Resistance at the Current Level - PRU

March 07, 2024 | Team Kalkine
One Gold Stock May Face Resistance at the Current Level - PRU

PRU:ASX
Investment Type
Mid - Cap
Risk Level
Action
Rec. Price (AU$)

Perseus Mining Ltd (ASX: PRU)

Perseus Mining Ltd is an Australia-based gold producer, developer, and explorer. The Company also conducts mineral exploration and evaluation activities in Africa.

Recommendation Rationale – SELL at AUD 2.07

  • Profit Booking: PRU’s share price has breached the Resistance 2 recommended on 13 February 2024, and offered a profit booking opportunity.
  • Overvalued Multiples: On a forward 12-month basis, key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book) are higher than the median of Basic Materials’ sector.
  • Financial Summary: During H1 FY24, PRU reported a 10% and 21% increase in Revenue and Profit after Tax YoY, respectively.
  • Technical Standpoint: The momentum oscillator, 14-day RSI (~78.16) indicates the overbought zone; thus, price can face correction in the short term.

PRU Daily Chart

(Source: REFINITIV; Analysis by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY June'25E) (Illustrative)

Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 2.07, at 3:53 PM AEDT, as of 7 March 2024.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

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 7 March 2024. 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.

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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