ASX materials stock Catalyst Metals Ltd (ASX: CYL) has been making headlines this week.
It has crashed more than 16% since Monday.
The company is a mid-tier Australian gold producer and developer with 100% ownership of two key projects:
- Plutonic Gold Operation (PGO) – an operating asset in Western Australia
- Bendigo Gold Project (BGP) – an advanced exploration project in Victoria
This recent fall has been influenced by a combination of a disappointing quarterly update and a softer gold price backdrop.
As James Mickleboro reported earlier this week, although the company posted a 9% increase in revenue to $54.8 million, it is still barely profitable at an EBITDA level.
In addition, the performance of its Appen Global business may have spooked investors. It reported a 37% decline in revenue to $19.9 million.
Image source: Getty Images
Brokers see opportunity
This ASX materials stock is now down almost 30% year to date, and almost 50% since hitting 52-week highs back in January.
However, since this drop, brokers have been eyeing this ASX materials stock as a buy-low candidate.
Earlier this week, I reported that Bell Potter has recently retained its buy recommendation along with a $14.60 price target on Catalyst Metals shares.
According to the broker, earnings per share are now expected to fall in FY26 by 19% and then recover and increase by 11% in FY27 and a further 14% in FY28.
This price target indicates more than 180% upside from today's stock price of $5.17.
Now, another broker is reinforcing this stock could be a buy-low candidate.
Morgans rates Catalyst Metals as a buy
In a recent note out of Morgans, the broker said the reported gold production of 26.1koz at an AISC of A$2,901/oz fell below expectations.
It noted that although the company generated a solid operating cash flow of A$103m at an average realised price of A$7,014/oz, it continues to strengthen its balance sheet, adding A$39m during the quarter to close with A$277m in cash and bullion while reinvesting heavily across growth and exploration initiatives.
Growth momentum continues across the Plutonic Belt, with multiple new ore sources advancing (Trident, K2, Old Highway) alongside a high-grade discovery at Cinnamon, supports the pathway to c.200kozpa production. We maintain our BUY rating, with valuation supported by strong cash generation and a clear production growth pipeline, albeit with near-term cost pressures emerging.
At the time of writing, 5 analysts' forecasts via TradingView have an average 12-month price target of $13.87.
This indicates roughly 170% upside from current levels.
