Inmet targets cut as earnings fall, costs rise
Inmet targets cut as earnings fall, costs rise
Inmet Mining Corp.'s second-quarter results came in well below street estimates, and analysts were quick to cut their targets.
Toronto-based Inmetreported earnings per share of $1.40 compared to $2.86 in the samequarter last year. Desjardins Securities analyst John Redstone notedthat much of the variance is related to foreign exchange losses. Buthe also wrote that 31¢ of it is a result of higher-than-expectedoperating costs as Inmet deals with many of the same problems plaguingthe rest of the industry.
He cut his target on Inmet to $97.70 a share, down from his previous forecast of $102.00 a share.
Thatis still well above the current level of about $62.00. Inmet shares hasbeen dragged down by delays at its Las Cruces and Cerattepe projects.The company has also launched a hostile bid for joint venture partner Petaquilla Copper Ltd. that needs to play out.
FraserPhillips of RBC Capital Markets also cut his outlook on Inmet, loweringhis target to $78.00 (from $85.00). That reflects lower-than-expectedproduction in 2008 and higher-than-expected costs going forward. Healso anticipates a start-up at Las Cruces in late 2009, which is abouta year later than Inmet anticipates (the project has been held up by awater permit suspension).
"We believe uncertainty around[Inmet's] key projects will likely limit its share price potential inthe near term," he wrote in a note.
Mr. Redstone rates Inmet a "buy" and Mr. Phillips calls it a "sector perform."
Peter Koven