Michael Heim of Noble Capital Markets Michael Heim of Noble Financial Capital Markets: “Largo reported 2023-1Q results generally in line with our recently-revised estimates. Revenues were a few million higher than expected, but so were operating costs, leading to operating income near expectations. Income tax expenses of $1.8 million on $0.7 million of pretax income were unexpected causing a $1.2 million net loss ($0.02 p/s) versus our expectations for breakeven results. We will seek clarification on the 268% tax rate during the upcoming conference call.
Production and sales numbers lowered for the rest of the year. Management lowered annual production guidance to 9,000-11,000 tonnes from 11,000-13,000 tonnes. It also lowered sales to 8,700-10,700 tonnes from 10,300-11,300 tonnes and raised the upper range of its operating costs per unit sold projections. The declines were split across the second, third, and fourth quarters implying that the heavy rainfall in December that affected inventory may continue longer than expected. We have adjusted the numbers in our models to reflect updated guidance"
Note: On Feb 7 2023, analyst Michael Heim of Noble Financial Capital Markets initiated coverage of Largo with a Buy rating and a target price of C$14.77. He reiterated the same rating and the same PT on Apr 18. He said: "Largo Inc. may report positive operating income, EBITDA and earnings in Q1/23. Such an accomplishment would be impressive given negative operating headwinds in the quarter. . .we maintain our Outperform rating."