First Berlin Equity Research has published a research update on Deutsche Rohstoff AG (ISIN: DE000A0XYG76). Analyst Simon Scholes reiterated his BUY rating and increased the price target from EUR 44.00 to EUR 50.00.
DRAG has raised base-case revenue and EBITDA guidance for 2023 by 20.6% and 16.7% respectively and for 2024 by 11.1% and 10.9% respectively. The new guidance updates numbers issued in the annual report at the end of April. The guidance increase is prompted by better than anticipated production from ten Occidental JV wells which came online in May (this bodes well for the Q3 results due on 31 October), the increase in the oil price since the end of August, and by a recent bond refinancing. Better than expected profitability and the bond refinancing have given DRAG the financial flexibility to increase its working interest in six recently drilled 1876 Resources wells and also to bring forward the start of production at four of these wells. We have revised up our forecasts and price target to reflect higher volume and pricing than we previously modelled and now see fair value for the DRAG share at €50.0 (previously: €44.0). We maintain our Buy recommendation.