According to the consensus estimates compiled by Thomson Reuters, Southern Copper (SCCO) has a mean one-year price target of $34.50, representing a 2.9% downside from its closing price on February 24. Of the 15 analysts surveyed by Thomson Reuters, only one has recommended Southern Copper as a “strong buy,” while two have recommended it as a “buy.” The stock has received a “strong sell” rating from one analyst, while five analysts have recommended the stock as a “sell.” The remaining six analysts have recommended a “hold” on the stock.
Southern Copper carried a one-year price target of $32.72 on January 30, one day before its 4Q16 earnings release. However, some analysts raised their target prices after SCCO’s 4Q16 earnings release. Now, as copper prices have shown strength amid supply-side issues, we’ve seen some more analysts raise Southern Copper’s target price.
For instance, on February 17, JP Morgan raised Southern Copper’s price target from $33 to $39. Prior to that, Barclays raised SCCO’s target price from $32 to $33. However, the brokerage downgraded the stock to “underweight” from “equal weight.”
Higher copper prices
According to the International Copper Study Group, global mined copper production is expected to be ~20.0 million metric tons in 2017. A complete shutdown of the Grasberg mine (FCX) (RIO) and an extended Escondida strike (BHP) could impact almost 9.0% of global mined copper production and potentially push global copper markets into a supply deficit this year.
Among other factors, supply disruption at the top two copper mines is supporting copper prices. As a pure-play copper miner with a rising production profile, Southern Copper stands to benefit from higher copper prices. Read You Should Know What’s Driving Copper Prices in 2017 to find out more about recent copper industry indicators.
In the next article, we’ll see how analysts are rating Teck Resources (TECK) after its 4Q16 earnings.