Oddo BHF has downgraded its Eramet shares from 'outperform' to 'underperform' with a target price slashed from €81 to €48, a decline that takes into account both adjustments in its forecasts and the increase in the risk premium.

The deterioration in the fundamentals of supply and demand for manganese and lithium no longer supports an increase in volumes at satisfactory profitability levels, the analyst says following last Thursday's quarterly results.

The broker has cut its EBITDA forecasts by over 10% and its earnings forecasts by more than 50%, warning that with price signals remaining negative, the risk of further forecast adjustments remains significant.

However, the main issue for us is the financial structure, whose expected deterioration could amplify the volatility that has historically weighed on the stock,  Oddo BHF adds, concluding that the valuation is no longer really supportive.


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