This beaten down ASX 200 stock could rise 90%

Bell Potter thinks this stock could be dirt cheap after a recent selloff.

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Bellevue Gold Ltd (ASX: BGL) shares had a terrible start to the week and were sold off on Monday.

The ASX 200 gold stock hit a 52-week low before ending the session 14% lower at 98.5 cents.

Why was this ASX 200 stock sold off?

Investors were hitting the sell button after the gold miner downgraded its production guidance for FY 2025.

Bellevue Gold revealed that it has revised its full year gold production guidance range to 150,000 ounces to 165,000 ounces from its original guidance range of 165,000 ounces to 180,000 ounces.

Management blamed this underperformance on lower grade production as the mine sequence progressed through the outer edges of the orebody moving towards the higher-grade core.

This appears to have sparked fears that the company may need to raise additional cash to fund future developments.

While the selloff has been disappointing for shareholders, the team at Bell Potter thinks it has created a buying opportunity for the rest of us.

Time to buy

According to a note this morning, its analysts believe that investors should be taking advantage of this selloff to load up on the ASX 200 stock. Especially given their belief that Bellevue Gold will not require a capital raising. They said:

Following the update, we reflect the 2Q result and update our 2HCY25 forecast to align with the middle of the production guidance range, forecasting quarterly production of 3QFY25: 40koz and 4QFY25: 50koz.

Combined with previous cost guidance (FY25 growth capital and exploration costs: $175m), we forecast no deterioration in the cash balance during the second half. However, another weak quarterly production result like that of 2Q would likely create speculation about the need for additional funding.

Big returns

The note reveals that Bell Potter has reaffirmed its buy rating on the ASX 200 stock with a trimmed price target of $1.90 (from $1.95). Based on its current share price of 98.5 cents, this implies potential upside of 93% for investors over the next 12 months.

Commenting on why it thinks investors should be buying the company's shares, Bell Potter said:

The current share price is factoring in little discovery upside relative to the exploration potential to be tested over the next two-years, and is more focused on the production underperformance relative to guidance. We see upside to the share price from: (1) continuing improvement in production and cost performance from ongoing commissioning and expansion, (2) near-mine exploration programmes over the next two years supporting market valuation increases, (3) strong spot gold prices.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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