EVRAZ share price prediction: Where next for Russian steelmaker?
Shares in EVRAZ (EVR), the Russian steelmaker in which Roman Abramovich is a major shareholder, remain suspended on the London Stock Exchange (LSE) and now the company has been directly sanctioned by the UK government.
The suspension came as a result of sanctions by the UK government on the Russian oligarch following Russia's invasion of Ukraine. Last week (5 May) sanctions were applied on the company as well by the UK Foreign Office which said: "The steel manufacturing and mining company operates in sectors of strategic significance to the Government of Russia."
It added that the "asset freeze means no UK citizen or company can do business with them."
On 1 April the company cancelled plans to demerge its coal assets (PJSC Raspadskaya) following the sanctions.
These actions have led to a collapse in the company's share price which was at 452p on 11 February and remain at 81p. The Evraz web site is "temporarily unavailable".
What does this all mean for investors? In this EVRAZ stock price analysis, we look at the outlook for EVRAZ and discuss whether life can ever return to normal.
EVRAZ (EVZ) technical analysis: Rally interrupted by the invasion of Ukraine
EVRAZ stock had been performing well until Russia invaded Ukraine. It had risen 22% during 2021, from £4.92 ($6.73) in early January to £6.01 by late December.
It fell dramatically, however, in the weeks leading up to its suspension from the London Stock Exchange on 10 March 2022, as shown in the EVRAZ share chart below.
The price slumped 87% due to the political fall-out of Russia’s invasion of Ukraine, going from £6.13-per-share at the start of the year to just below 81p at the time of the stock’s suspension by the Financial Conduct Authority. Will the EVR share price rebound after the crash?
EVRAZ outlook: Latest earnings
On 25 February 2022, EVRAZ announced total revenue for 2021 had risen 45% to $14.16bn, with net profit up 262% to $3.1bn. It also had more than $2.2bn in free cash flow.
It also stated the demerger of its coal business was expected to be completed in late March 2022. However that move was cancelled on 1 April. The company's statement said: "In light of the unprecedented sanctions against Russia and Russian special economic measures in response to sanctions, which were outside of control of the Company, execution of the transaction became technically impossible."
In a statement, chief executive Aleksey Ivanov said demand-side fluctuations had been the principal driver of the steel industry in 2021.
Looking ahead, Ivanov said the plan was to “press ahead with further improving our ESG performance” and “strengthening our culture” of continuous operational improvement.
“We are conscious of the current geopolitical circumstances,” he added. “We continue to monitor the situation and will keep you updated regarding any material developments that can influence our business.”
EVRAZ share news: Escalating tensions
Unfortunately, the robust results were overshadowed by the escalating Russia-Ukraine crisis.
In late February, EVRAZ told Reuters that it was not planning on de-listing from the London Stock Exchange, despite the heightened geopolitical risks.
It did add that a secondary listing on the Moscow Exchange was still under consideration, however, and the company failed to rule out that such a move could take place in 2022.
International sanctions
On 9 March 2022, EVRAZ issued a statement saying that it was “deeply concerned and saddened” by the Ukraine-Russia conflict and hoped that a peaceful resolution would be found soon.
It also provided an update on its business operations, emphasising that the international sanctions against Russia had not had any material effect on its operations.
“The company will continue to keep EVRAZ shareholders updated in accordance with its legal and regulatory obligations,” it stated.
Interim dividend cancellation
On the same day, the company also announced that its interim dividend payment of $729m ($0.50 per share), which had been planned for 30 March 2022, would not go ahead.
In a statement, it declared the payment was not considered in the best interests of the company or its shareholders.
Temporary suspension and board changes
The UK’s Financial Conduct Authority announced on 10 March 2022 that it was suspending the securities of EVRAZ to “protect investors”, pending clarification of the effect of UK sanctions.
The following day, EVRAZ issued a statement that reaffirmed its hope that a peaceful resolution could be reached and announced the resignation of all its non-executive directors.
Board appointment
In a release on 11 March EVRAZ reported that Nikolay Ivanov, who had joined the company as chief financial officer in November 2016, had been appointed as an executive director to the board.
EVRAZ share price prediction: Targets for 2022 and beyond
Is EVRAZ a good investment in 2022? Is it possible for the stock to recover from the recent EVRAZ share price drop to the levels not seen during the past five years? According to the algorithmic EVRAZ stock forecast of Wallet Investor on 10 May, the stock was still listed as an “awesome long-term (one year) investment”.
Are EVR shares a ‘buy’, ‘sell, or ‘hold’? The view from MarketBeat suggests the stock as a ‘buy’ that will rise to £6.50 over the next 12 months. This was based on a single analyst, however, so hardly a reflection of current market sentiment.
Meanwhile, TipRanks also gave an optimistic EVRAZ share price forecast based on the expectations of three analysts. Two of them rated the stock a ‘buy’, and one kept neutral with a ‘hold’ recommendation. Their EVRAZ share price prediction said that the stock could average at £6.5 within 12 months.
Remember the shares are currently suspended and these estimates should be treated with an abundance of caution.
EVRAZ share price prediction: What the analysts think
With shares in EVRAZ suspended on the London Stock Exchange, there is vast uncertainty ahead for existing shareholders, according to Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
However, she believes there are still likely to be long-term implications.
Danni Hewson, a financial analyst at AJ Bell, agrees that there are “an awful lot of ifs, buts and maybes to consider” when it comes to EVR shares.
There are many variables to consider, however, not least of which is whether investors want to have any relationship with a company whose “roots are in a country” that has done so much damage, Hewson suggests.
“Certainly, the shares look incredibly cheap, and commodity prices don’t look like falling back any time soon,” she said. “The company doesn’t just have operations in Russia, and it could be some of its other operations will produce windfall profits, but there are no guarantees apart from that the share price is likely to remain volatile for the foreseeable future.”
When looking for EVRAZ (EVR) stock predictions, it’s important to bear in mind that analysts’ forecasts and algorithm-based price targets can be wrong. Projections are based on making fundamental and technical studies of the EVR stock’s historical price pattern – but past performance does not guarantee future results.
It is essential to do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never trade money that you cannot afford to lose.
Backdrop
EVRAZ is a steel, mining and vanadium business with operations in Russia, the United States, Canada, the Czech Republic and Kazakhstan.
Its origins date back to 1992 when a group of Russian scientists and engineers established EVRAZMetall, which specialised in trading steel products and supplying raw materials to steel mills.
It became a London-listed company in 2011 and was subsequently promoted to the blue-chip FTSE 100 (UK100) index of leading companies.