Imdex is the leading global supplier of intelligent drill rig tools, drilling fluids and software to the mining industry. The company is predominantly exposed to the exploration market (80%) meaning its fortunes are largely tied to exploration spend, Morgans notes.

Exploration spend is driven by gold and copper prices as these commodities generally make up  around 50% and 25% of spend respectively. Throughout its history however, Morgans points out, Imdex has demonstrated levers to grow above market by gaining share, introducing new products and upgrading products.

The broker initiates coverage with an Add rating and $2.50 target.

Sector: Materials.

Target price is $2.50.Current Price is $2.22. Difference: $0.28 - (brackets indicate current price is over target). If IMD meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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