An updated broker report from Petra Capital maintains the BUY recommendation on DRM.
http://files.globalalliancepartners.com/propositions/d2ab78893d37d32542ef0d1d4941cc3a.pdf
Context
Although DRM reported a slightly weaker 1H 18 result, with sustainable production & costs now achieved, 2H18 will be more reflective of the business going forward.
Valuation
When we think about a valuation, the stock remains cheap today at only 2.7x forecast 2H18 EV/EBITDA and 2x FY19. Petra forecast revenue of $146m in FY19 and NPAT of $9m.
Conclusion
Petra Capital maintain a BUY recommendation and a target price of 36 cents. "With the recent equity raise providing an improved balance sheet and increased exploration budget, we are now looking forward to upside from Da Vinci and further growth of the Deflector orebodies. Further, value-adding opportunities are still being considered at Andy Well, with a resolution by mid-year.
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