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How Analysts View Copper Miners amid the Market Carnage

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Part 7
How Analysts View Copper Miners amid the Market Carnage PART 7 OF 8

How Analysts Rate Southern Copper after 4Q17 Earnings

Analysts

Southern Copper (SCCO) has received a “buy” rating from only one analyst, while six analysts rate the stock as a “hold” or some equivalent. The remaining five analysts polled by Thomson Reuters on February 9 have rated Southern Copper as a “sell” or lower.

Southern Copper has received a mean consensus price target of $44.96, which is 3.3% lower than its February 9 closing prices. In contrast, it carried a one-year target price of $42.88 on February 1, one day before its earnings release. Let’s now see how analysts changed their recommendations on Southern Copper after its 4Q17 earnings release.

How Analysts Rate Southern Copper after 4Q17 Earnings

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Recent action

On February 7, Cowen and Company raised Southern Copper’s price target from $48 to $53. Berenberg also raised Southern Copper’s price target from $31 to $39 the next day. However, in January, UBS had downgraded Southern Copper to “hold” from “buy.”

4Q17 earnings

Southern Copper posted a net loss of $287.5 million in 4Q17. According to Southern Copper, the losses were “due to a one-time, non-cash income tax reform adjustment of $743.3 million as a result of the new US income tax legislation enacted in 4Q17, that resulted in the cancellation of foreign tax credit carryforwards that were generated prior to the new legislation by taxes paid in Peru and Mexico, where we operate.”

The company produced 226,000 metric tons of copper in 4Q17, which was 0.7% lower than in 4Q16. In 2017, Southern Copper’s mined copper production (BHP) fell 2.6% year-over-year to 0.87 million metric tons. However, the company expects its Toquepala expansion project to add 100,000 metric tons to its 2018 mined copper production (FCX) (RIO). Southern Copper expects to produce 1.5 million metric tons of copper by 2023.

In the next article, we’ll see how analysts are rating First Quantum Minerals (FM).

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