Canaccord Genuity drops Capital to 'hold', slashes target price

Analysts at Canaccord Genuity slashed their target price on mining services firm Capital from 130.0p to 60.0p on Tuesday and dropped the stock from 'buy' to 'hold' following disappointing FY25 revenue guidance.

Capital Limited (DI)
11 March 2025 13:05:47

Source: Sharecast

Capital announced FY25 revenue guidance of $300.0-320.0m, weighted to H2, implying an 8-14% decrease versus. Canaccord noted the revenue decline could be attributed to lower mining revenues, while MSALABS growth has also been slower than anticipated and not enough to offset the broader decline.

Canaccord stated that when it initially formed its thesis, a key component was the company's ability to operate in a difficult jurisdiction, where the competition was more fractured and margins were higher, which led to higher capital efficiency than drilling peers.

Since then, however, the company has pivoted towards lower margin businesses, and the US, which has required a significant increase in capital investment.

The Canadian bank also noted that the company's NGM drilling contract has seen delays, which has negatively impacted group margins. Similarly, Capital has also consistently missed its revenue guidance for the MSALABS business since 2022, with the latest FY25 guidance of $50.0-60.0m significantly lower than the $80.0m previously targeted.

Reporting by Iain Gilbert at Sharecast.com

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