Following Iluka Resources' 3Q results, Morgan Stanley reduces its target to $7.15 from $8.20 and retains its Equal-weight rating. Industry view: Attractive.

At the end of last week, the broker provided the following summary of the results:

Morgan Stanley suspected inventory builds in the 3Q were at the heart of weaker sales across all products for Iluka Resources. While production was in line with the broker's forecast, it fell short of the consensus estimate.

Pricing across zircon, rutile and synthetic rutile was weaker due to product mix, despite management previously flagging price stability, noted the broker.

Helping to alleviate some pressure on inventories, synthetic rutile production is due for a restart in January following outages, explained the analysts.

Sector: Materials.

Target price is $7.15.Current Price is $6.96. Difference: $0.19 - (brackets indicate current price is over target). If ILU meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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