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Sasol Stock Soars on Analyst Upgrade
10 Sep
Summary
- Analyst upgraded Sasol shares from neutral to buy.
- Free cash flow could more than double to 33 billion rand.
- Dividend reinstatement is a potential outcome of improved financials.
South Africa-based chemical company Sasol experienced a substantial increase in its U.S.-listed equity. This upward momentum was largely propelled by an analyst's recommendation upgrade.
An analyst from Bank of America Securities, Sashank Lanka, revised his rating on Sasol from neutral to buy. He also raised his price target for the company's South Africa-listed shares. Lanka expressed optimism regarding Sasol's prospects in the oil segment.
He projected that these opportunities could more than double the company's free cash flow to 33 billion rand in the current fiscal year. Projections for 2028 remain strong, with an estimated 26 billion rand in free cash flow.
This anticipated financial improvement has led to speculation that Sasol might reinstate its dividend. The company had previously suspended its dividend payout, citing net debt exceeding its established threshold for dividend payments.
However, caution is advised as the global chemicals industry is at or near the bottom of a down cycle, with recovery not expected to be rapid. Despite Sasol's strengths, operating in a sector with few clear catalysts for a general upswing could continue to be a drag on the company's performance.
