Yahoo Finance Why Most Analysts Recommend a ‘Hold’ for Southern Copper
How Are Analysts Rating Copper Producers ahead of 1Q16 Earnings?
Southern Copper
Southern Copper (SCCO) and Turquoise Hill Resources (TRQ) (RIO) are among the pure-play copper producers. Like TRQ, Southern Copper is also ramping up its copper production. Furthermore, both these companies’ unit copper costs are lower as compared to some of their other peer companies. Let’s see how analysts are rating Southern Copper in April.
Analyst recommendations
According to consensus estimates compiled by Bloomberg, Southern Copper has a one-year price target of $27.52, which is marginally less than SCCO’s current stock price. Out of the 23 analysts surveyed by Bloomberg, only two rate the stock as a “buy” while three analysts rate the stock as a “sell.” The majority of analysts rate the stock as a “hold.”
Recommendation changes
Last month, most analysts maintained their ratings on Southern Copper. However, BMO Capital Markets downgraded SCCO to “market perform” with a target price of $30. As discussed previously, BMO Capital Markets has a “market perform” rating on Freeport-McMoRan (FCX) and also has a one-year price target of $9.
Note that SCCO’s leverage ratios have increased over the last few quarters, as the company is in the midst of an expansion plan. However, its leverage ratios are still much more comfortable as compared to some of the other companies in this space.
Furthermore, while other metals and mining companies (XME) like Freeport-McMoRan (FCX) are selling off assets to shore up the balance sheet, SCCO is investing for future expansion. Companies that are holding on to their assets during the current downturn will be better placed to capture the upside when the commodity cycle turns around. You can read Southern Copper: A Business Overview of a Copper Giant to find out more about SCCO.
You can also visit Market Realist’s Copper page for other developments in this industry.
Browse this series on Market Realist: