SOUTH32 LTD SPON ADR EA REPR 5 ORD (OTCMKTS:SOUHY) was a massive decliner during Tuesday’s trading session, plunging by 8% on heavy volumes, which were 4 times the 30 day average turnover. Bears seem to be in total control as the stock continues to form lower tops and lower bottoms. South32 LTD currently trades below all important moving averages, which is a bearish sign. The oscillator measuring momentum continues to trend lower and shows no signs of a reversal. The RSI oscillator has continued its downtrend indicative of the strong bearish momentum. The stock hit a fresh 52-week low during yesterdays’ trading session, which is bearish.
The stock price of SOUTH32 LTD SPON ADR EA REPR 5 ORD (OTCMKTS:SOUHY) crashed by a wide margin during the previous trading session. The mining company recently received an average broker rating from two sell-side analysts, which were surveyed by Zacks Investment Research.
Rating outlook
According to the polled brokerage firms, the company’s average rating score stands at 3, which implies a ‘Hold’ recommendation. In addition to this, Zacks has also issued an Industry rank of 159 out of 265 similar companies in the industry. A November’s report issued by Zacks Investment Research had revised the rating on the company upwards to ‘Hold’ from its earlier ‘sell’ recommendation. Following which, Citigroup also released a rating outlook on the company, where it downgraded the rating to ‘neutral’ from ‘buy’.
Meanwhile, the weak commodity prices continue to put pressure on SOUTH32 LTD SPON ADR EA REPR 5 ORD (OTCMKTS:SOUHY)’s forward plans. At a recent analyst roundtable, the company has warned three of its operations, namely Cerro Matoso nickel mine in Colombia, the South Africa manganese ops and Illawarra metallurgical coal, to become cash flow positive before December 31 or face closure.
Restructuring plans
The company’s chief Graham Kerr signalled more troubled times for commodities ahead. He told the analysts that the commodity prices may witness price weakness for another two years before recovering to normal levels. Despite the odds, the company is still positioned to generate cash and is firm on its dividend payout policy, which is pegged at 40% of the earnings.
At the same time, the company has indicated that it might undertake restructuring options, which may include a reduction in headcount. According to analysts, the outlook for the company over short to medium term remains negative.
The stock price of SOUTH32 LTD SPON ADR EA REPR 5 ORD (OTCMKTS:SOUHY) fell by over 8% to $3.60 yesterday.
