JPMorgan is initiating coverage of Metlen with an Overweight rating and a target price of €64 per share, implying approximately 30% upside potential compared with the price of €48.4 at the time the report was published.
In the “blue sky” scenario, that is, if all development projects are implemented on time and within budget, JPMorgan’s valuation reaches €76 per share.
A key pillar of JPMorgan’s investment case is the doubling of EBITDA, from about €1 billion today to about €2.0 billion in the medium term. This increase is estimated to come about 60% from lower-risk brownfield projects and 40% from greenfield activities, such as gallium, Circular Metals, and defense equipment.
Downside risk for the metals sector is limited through risk hedging (hedging). JPMorgan notes that Metlen’s exposure to alumina and aluminum is hedged to a significant extent through 2028, protecting earnings from the oversupply in the aluminum market expected after 2027.
Gallium is of strategic importance. Metlen could develop into one of the few gallium producers outside China, a development which, according to JPMorgan, is aligned with European policy on critical raw materials and critical minerals.