Mining Services Sector Too Strong for Transitory, Manageable Issues, Says Jefferies
Mining services sector's issues like diesel pressures or labor shortage are temporary or manageable, as the oil shock will ease after the Middle East peace deal and the industry has previously managed labor shortages, according to a Saturday Jefferies note.The mining capital expenditure and exploration cycle is too strong to ignore or underweight, which should last at least 3 years and probably beyond, Jefferies said, as it believes that upgrades will easily outweigh downgrades during this time, and sector earnings growth will easily surpass the ASX 300.Jefferies upgraded ALS (ASX:ALQ) and Imdex (ASX:IMD) to a buy and increased their price targets to AU$26 from AU$24.40 and AU$5 from AU$4.80, respectively.Jefferies also upgraded Perenti (ASX:PRN) to a buy and lifted its price target to AU$2.45 from AU$2.35.The investment firm downgraded MAAS Group (ASX:MGH) to hold with a price target of AU$5.50, while keeping the same rating on NRW (ASX:NWH) with a price target of AU$6.40, up from AU$6.20.Jefferies kept an underperform rating on Monadelphous Group (ASX:MND) and increased its price target to AU$24 from AU$23.ALS rose past 4%, Imdex jumped over 5%, Perenti surged almost 7%, NRW Holdings was up 4%, and Monadelphous climbed nearly 5% in recent Monday trade. MAAS Group fell roughly 3%.