Jefferies analyst Mitch Ryan has downgraded 29Metals shares (ASX: 29M) to “Underperform” from “Hold,” signalling a potential slowdown after a period of significant share price appreciation.
The downgrade follows a remarkable 181.82% surge in 29Metals’ share price over the past 12 months. Year-to-date, 29M has also started strong, climbing 8.77%. However, the analyst’s revised outlook suggests that the recent rally may not be sustainable given the company’s current performance. Whilst the shares were moved to ‘Underperform’, the price target on 29M was raised to A$0.45 (from A$0.40). This increase however significantly tails the current price action, with 29Metals shares closing the day at A$0.62.
Looking at recent operational developments, in October, 29Metals reported an 86% shortfall in expected zinc production for the fourth quarter, primarily attributed to seismic issues at the Xantho Extended mine. These production setbacks have raised concerns about the company’s operational efficiency and ability to meet future targets.
Prior to the downgrade, Jefferies had upgraded 29Metals to “Hold” in October 2025, citing a supportive macroeconomic environment and the expiration of zinc treatment charge escalators. The recent shift to “Underperform” indicates a change in sentiment, likely influenced by ongoing operational challenges and valuation concerns.
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Bull Case:
- Supportive macroeconomic environment may improve base metal prices.
- Successful equity raising strengthens balance sheet for future growth.
- Potential for operational improvements at Xantho Extended mine.
Bear Case:
- Significant zinc production miss raises operational concerns.
- Downgrade to “Underperform” signals negative analyst sentiment.
- Reduced stake by EMR Capital Holdings indicates waning investor confidence.
The analyst downgrade reflects a more cautious outlook for 29Metals. While the company’s share price has seen substantial gains, investors should be aware of the risks associated with ongoing production issues and financial restructuring. The company’s ability to overcome operational hurdles and maintain investor confidence will be crucial in determining its future performance.
