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Message: Quadra Mining Getting Expensive - Canaccord Adams

Quadra Mining Getting Expensive - Canaccord Adams

posted on May 24, 2009 04:40AM

http://seekingalpha.com/article/1392...

Quadra Mining Getting Expensive - Canaccord Adams

by: FP Trading Desk May 24, 2009 | about stocks: QADMF.PK


Copper miner Quadra Mining Ltd. (QADMF.PK) has enjoyed a fantastic run this year, with shares up 300% since bottoming out last December. Canaccord Adams analyst Orest Wowkodaw has a target price of C$8.50 a share, and there is little implied return to that anymore. He downgraded the stock to "hold" but kept the target steady.

He wrote in a note:

Given the little implied return to our target, the shares' relatively in-line valuation to our coverage universe peer group, combined with the company's higher-cost profile in a still-shaky copper price environment, we can no longer justify a 'buy' rating at current levels.

That said, he also wrote that Quadra remains an attractive investment vehicle for longer-term holders given the company's "significant" near-term growth profile and its leverage to an eventual recovery in copper prices (which have already jumped more than 60% from their lows last year).

Quadra is trading at estimated-value-to-EBITDA multiples of 7.8 times for 2009 and 3.6 times for 2010, Mr. Wowkodaw wrote. That compares to averages of 8.3 times (for 2009) and 4.1 times (for 2010) for the mid-cap base metal companies that Canaccord covers.

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