RBC bullish on Mineral Resources stock as capex cuts and cashflow focus drive strategy

On Friday, RBC Capital Markets updated its outlook on Mineral Resources Limited (ASX:MIN) (OTC: MALRF), stock increasing the price target to AUD64.00 from AUD63.00, while reiterating an Outperform rating. The revision follows the company’s recent announcement of an energy asset sale, which the analyst believes is value accretive and has occurred sooner than anticipated. The proceeds from this transaction are expected to be used to reduce the company’s debt.

The analyst noted that the first quarter results were broadly in line with expectations, but the significant news was the energy asset divestiture. This move aligns with Mineral Resources’ 24-month strategy, which focuses on prioritizing the balance sheet, reducing capital expenditures, increasing production at the Onslow project, and operating assets to maximize cash flow.

In addition to the asset sale, Mineral Resources also revealed plans to defer the Mt Marion underground project and implement further cost-cutting measures to align operations more closely with current market conditions. The analyst anticipates that the company’s highest level of gearing will occur in the first half of the fiscal year 2026 as capital expenditures decline.

Following the integration of these latest developments into their financial models, there were minor changes to the estimated earnings per share (EPS), but these adjustments contributed to the decision to raise the price target slightly to AUD64.00. The Outperform rating on Mineral Resources’ stock remains unchanged, indicating continued confidence in the company’s performance.

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