Q: I realize a lot has been said about BTO recently, but most of the discussion has focused on (reduced) 2026 expectations. At current levels, do you think that downside risk should be reasonably low? Analysts have been increasing estimates for ’27 such that at the Feb/24 close the Fwd PE is only 5.4x. That seems to be a very low # for a company in one of the strongest sectors, which tells me the market has already baked in future execution misses, helping to reduce downside risk. Conversely, if execution does improve by ’27 the stock looks like an easy double from here.
5i Research Answer:
We would fully agree, if BTO had a better long term record of execution. As such, we can only partially agree. But, upside should be good if things go as planned. It is cheap, and it does have a dividend while investors wait. And, it is not like it hasn't participated in the gold rally, as it is up 103% in a year. Certainly the valuation has set expectations and the bar low here.