The Sandfire Resources Ltd (ASX: SFR) share price is crashing as some brokers are warning investors to sell the shares following its profit results and update yesterday.
The copper miner plunged 10.8% to $5.98 this morning. This makes it the worst performer on the S&P/ASX 200 Index (ASX: XJO) at the time of writing.
Poor results and MATSA update sinks the Sandfire share price
Sandfire reported a first half net profit of US$54 million which was below consensus expectations of US$70 million.
But that was arguably not the worse piece of news. The update on the MATSA project added insult to injury.
“Focus was all on updated FY22 group guidance including the recently acquired MATSA underground copper/zinc mine in Spain,” said Goldman Sachs.
“At MATSA; both production and cost guidance [were] c. 5-10% worse than the guidance provided at the time of acquisition.”
Why Goldman is telling investors to sell
The miss is due to the lowering of cut-off, and therefore head grades. This means the costs to operate the mine is higher than expected.
Shareholders will have to wait until around the middle of this year to get an update on resources of reserves for MATSA.
Goldman Sachs reiterated its sell recommendation on the Sandfire share price. Its 12-month price target on the miner is $5.75 a share.
Dividend miss adds to gloom
Another with a dim view of Sandfire is JPMorgan. The broker noted that the miner’s results were not only below its forecasts, but the interim dividend of 3 cents per share was 2 cents shy of its expectations.
While the updated MATSA production guidance of 5 million tonnes to June 2022 was similar to what the broker had pencilled in, the cash cost of US94 cents a pound was significantly ahead of JPMorgan’s forecast.
JPMorgan retained its underweight recommendation on the Sandfire share price with a price target of $5 a share.
Sandfire share price still has its supporters
However, not all brokers have abandoned the miner. Macquarie Group Ltd (ASX: MQG) stuck to its outperform call on Sandfire despite the disappointing result, although it lowered its price target by 5% to $9 a share.
Meanwhile, Shaw and Partners are also urging supporters to keep the faith. The broker said the results were ok and continued to keep its buy recommendation on the shares.
Its 12-month price target on the Sandfire share price is $7.80 a share.
The post Why is the Sandfire (ASX:SFR) share price fizzling 11% today? appeared first on The Motley Fool Australia.
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Motley Fool contributor Brendon Lau owns Macquarie Group Limited and Sandfire Resources NL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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