Stifel Canada raised its price target on the shares of Neo Performance Materials (NEO.TO) to $44.00 from $38.00 and maintained a buy rating after the company closed a $115.0 million equity raise.
Funds will be used to help the company "sustainably" deliver over US$120 million of EBITDA annually, analyst Ian Gillies writes.
The largest portion of the proceeds will be to move Estonia Phase 1B forward and to automate the Estonia plant. With Estonia phase 1B effectively ready to move forward, Gillies is now including the present value of run rate EBITDA in his target price methodology. "We continue to believe that NEO is an excellent avenue to invest in rare earths given its global commercial production, well-defined operational platform and relatively inexpensive valuation."
The stock has performed well since the offering date, up 16% (S&P/TSX: 0.7%), suggesting strong support, he adds.
Price: $32.28, Change: $-2.10, Percent Change: -6.11%