DA Davidson Downgrades Target to $108 from $115, Maintains Buy Rating

DA Davidson Downgrades Target to $108 from $115, Maintains Buy Rating

DA Davidson has recently downgraded its target price for Vox Royalty (NASDAQ: VOXR) from $115 to $108, while maintaining a buy rating. The downgrade reflects the recent earnings report, which showed a 2% decline in quarterly revenue and a 12% decline in operating cash flow compared to the year-ago period. The analysts noted that the softness in these figures was primarily due to the company's iron ore royalty portfolio and lower iron ore prices Vox Royalty: Where Growth Meets Value^[1].

However, the analysts also highlighted several positive aspects that the market seems to be missing. Iron ore prices have rebounded sharply to start H1'25, with prices trading materially above the Q2'25 average. Additionally, Vox Royalty's gold portfolio showed strong growth in royalty receipts, which will likely translate to higher revenue in H2'25 as iron ore shipments increase and prices remain high Vox Royalty: Where Growth Meets Value^[1].

Moreover, Vox Royalty has completed an accretive deal that could see its cash flow increase by more than 10x in Q1'25 compared to Q1'24 levels. The company announced the purchase of an offtake portfolio from Deterra Royalties for ~$60 million, which will provide considerable operating leverage and growth in cash flow per share Vox Royalty: Where Growth Meets Value^[1]. This acquisition includes 10 offtake and royalty assets across eight countries, a significant addition to Vox Royalty's portfolio.

DA Davidson's downgrade reflects a cautious approach to the company's recent performance, but the analysts maintain a buy rating, indicating their belief in Vox Royalty's long-term potential. The company's strong gold portfolio and recent acquisitions position it well for future growth, despite the temporary setbacks in its iron ore portfolio.