Evolution Mining Ltd (ASX: EVN) stock has more than doubled in value over the past year.
And the Evolution Mining share price hit a four-year high of $6.37 on Wednesday.
Can there be any growth potential left after such a strong run?
Let's find out.
What pushed Evolution Mining stock to a four-year high?
Evolution Mining's four-year high occurred on Wednesday after the gold miner released its 1H FY25 results.
The company revealed a record statutory net profit of $365 million, up 277%, for 1H FY25.
There was also a record underlying net profit of $385 million, up 144%.
This resulted in the miner increasing its interim dividend by 250%.
Shareholders will receive 7 cents per share, up from 2 cents per share in 1H FY24.
Is there any room for more share price growth?
Evolution Mining stock closed at $6.25 per share on Thursday, down 0.64%.
Following the 1H FY25 report, top broker Goldman Sachs maintained its neutral rating on Evolution Mining stock with a price target of $5.35.
That means the broker expects Evolution Mining stock to fall by approximately 14% over the next 12 months.
Part of the reason for the neutral rating is valuation.
The broker estimates that Evolution Mining stock is trading at 1.25x net asset value (NAV).
Goldman said:
On our LT gold price of US$2,300/oz and copper price of US$4.57/lb, EVN is trading on ~1.25x NAV, or pricing ~US$2,710/oz gold (peer average ~1.05x and ~US$2,340/oz respectively), and near-term FCF yields of c.6-10% appear increasingly in line with peers.
While ongoing deleveraging will likely continue to support the equity outlook, with growing upside to capital returns, we now see this as more priced in on our gold/copper outlook.
However, while Goldman sees downside risk for Evolution Mining, Bell Potter is bullish.
Bell Potter explains why it's time to buy
Bell Potter initiated coverage on Evolution Mining stock this week, before the miner released its 1H FY25 figures.
The broker has a buy rating on the stock with a 12-month price target of $6.65.
So, it sees a potential 6% upside for the Evolution Mining stock price from here.
The broker says Evolution Mining offers "effectively unhedged gold and copper exposure via a portfolio of high quality, long-life assets in Tier 1 jurisdictions".
Bell Potter is impressed by the company's consistent growth strategy, which has led to an improved asset portfolio.
Most recently, this has included acquiring 80% of the Northparkes copper-gold mine.
Evolution also took full ownership of the Ernest Henry copper-gold mine, and expanded its 100%-owned Cowal Gold Mine and Mungari Gold Operations.
Evolution now has six gold and gold-copper mines.
They're producing about 720 kozpa gold plus 68 ktpa copper (about 1Moz gold equivalent).
Both gold and copper prices are strong.
The gold price rose to a new record high above US$2,940 per ounce this week. The copper price has traded at 8-month highs of about US$4.70 per pound this week.
Bell Potter says it is "constructive on the outlook for both metals".
The broker says it's time to buy Evolution Mining stock to capitalise on its improved position.
Bell Potter explains:
Over the last several years EVN has made significant investments in both organic and acquisitive growth …
While parts of the market have viewed these investments as expensive, our view (particularly in light of the current gold price environment and copper price outlook), is that these investments have been well timed.
EVN is now passing its CAPEX peak and we forecast increasing free cash flows, de-leveraging of the balance sheet and rising dividend distributions supported by EVN's near-unhedged gold and copper price exposure.
