According to consensus estimates compiled by Thomson Reuters, Southern Copper (SCCO) has a mean one-year price target of $31.69, a 3.2% downside over its December 23, 2016, closing price.
Some analysts have raised Southern Copper’s target price as copper market conditions have somewhat improved. On October 23, Southern Copper had a mean one-year price target of $29.78.
Of the 21 analysts surveyed by Thomson Reuters, only one has rated Southern Copper as a “strong buy,” while two have rated it as a “buy.” The stock has received a “strong sell” rating from one analyst, while three analysts have rated the stock as a “sell.” The remaining nine analysts have rated the stock as a “hold.”
Pure-play copper producer
We should note that Southern Copper and Turquoise Hill Resources (TRQ) (RIO) are pure-play copper producers. Like Turquoise Hill Resources, Southern Copper is ramping up its copper production. Both of these companies’ unit copper costs are lower than those of some of their peers.
While other copper producers (BHP) such as Freeport-McMoRan (FCX) have sold their copper assets, Southern Copper is in the midst of an aggressive expansion plan. The company is investing in the development of the Tia Maria mine and the expansion of its Buenavista mine. The company expects to produce 1.2 million metric tons of copper in 2020, which is 31% higher than what it’s expected to produce this year. A rising production profile coupled with higher copper prices could bode well for Southern Copper.
In the next article, we’ll see how analysts are rating Turquoise Hill Resources.