Nickel Industries Ltd (ASX: NIC) shares are trading in the red on Wednesday. At the time of writing, the ASX All Ords mining stock's shares are 0.35% lower and changing hands for $0.7175 each.
Over the past six months, Nickel Industries' shares have jumped 30% higher, but thanks to a sell-off to a five-year low in April, its shares are still 26.29% lower than this time last year.
For context, the S&P/ASX All Ordinaries Index (ASX: XAO) is also trading in the red on Wednesday. At the time of writing, the index is down 0.49% higher at 9,249.90 points.
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What's the latest from Nickel Industries?
The miner released its quarterly activities report yesterday morning where it revealed a 2% increase in production for the quarter to 31,148 tonnes.
The company also revealed a 10% drop in earnings before interest, tax, depreciation and amortisation (EBITDA) to US$80.4 million, after FX losses.
It also had a solid cash cost performance of US$9,846 per tonne for the quarter, which resulted in an adjusted EBITDA of US$40.5 million.
What does Macquarie think of the stock following the update?
In a note to investors, the broker has confirmed its outperform rating on the ASX All Ords mining stock. It has also raised its target price to 85 cents per share, up from 80 cents per share earlier this month.
At the time of writing, that represents a potential 18.5% upside for investors over the next 12 months.
"Valuation: OP; our TP increases 6% to A$0.85/sh due to EPS increases," Macquarie said.
The broker increased its CY26, CY27, and CY28 earnings per share guidance by 2% for each calendar year to incorporate earnings in the latest quarterly update.
"Outperform: 3QCY25 was a beat vs most metrics, and should NIC receive its RKAB licence increase, this could lead to a positive re-rating event, noting that Hengjaya mine was responsible for 41% of 3Q EBITDA," Macquarie said.
Macquarie said Nickel Industries' total EBITDA, after FX, of US$80.4 million was 13% higher than market expectations and 29% higher than Macquarie estimates.
The cash cost performance was 4% lower than market expectations. But the resulting adjusted EBITDA, of US$40.5 million, was 55% higher than market expectations and 44% higher than Macquarie estimates.
What Macquarie wasn't happy with
In its investor note, the broker also commented that it was unhappy that the ASX All Ords mining stock did not raise its mining quota at its Hengjaya site.
"NIC had previously indicated that it was expecting approvals to increase its Mining Quota (RKAB) at Hengjaya from 9mt to 19mt during the 3QCY25. Unfortunately approvals have taken longer than expected and as a result NIC hit its sales cap ceiling of 9mt during September, and is unlikely to ship any ore during the month of October," the broker said.
"NIC is hoping to receive the RKAB approvals imminently, and this represents a major catalyst for the company and is the difference between a good and bad 4QCY25 for NIC. We have reduced our 4QCY25 Hengjaya sales volumes to 2Mt (previously 3Mt) to account for the delay to the increase in the RKAB."
