Analyst upgrade... In a research report released Tuesday, Dalton Baretto of Cannacord Genuity predicted a “volatile” environment will persist through 2023 as major supply-demand issues continue to emerge and impact both commodity prices and equity valuations.
“From a geopolitical and global trade perspective, we believe what we are seeing today is the equivalent of Pangaea breaking apart, and that we are in the early days of the global economy splintering into two blocs,” he said. “In our view, these machinations will be significantly inflationary:
"We expect fierce competition among nations and alliances to lock up commodity supplies for food, energy, and economic security and we expect significant supply chain realignment over the medium term as companies and countries move to lower supply risk."
“As such, we expect a decade of commodity price support, with the industrial commodity complex poised to benefit from:
• Inflationary trends
• A movement to lower reliance on the US$
• Building of strategic stockpiles
• (Re)building onshore manufacturing capability.”
Mr. Baretto made “limited” changes to his near-term commodity price forecasts, seeing the current dynamics already priced in. However, he increased his medium-term projections for several “critical” metals, including copper and high-grade iron ore, seeing supply issues.
One of his top picks at this time is IVN... increaseing his target price for Ivanhoe as follows:
Ivanhoe Mines Ltd. (IVN-T, “buy”) to $16 from $14.50. Average: $14.87. "We believe the ongoing ramp-up of Kamoa-Kakula coupled with an expanded Phase 3 plan and drill results from the Western Forelands should be meaningful tailwinds for the share price.”