Deutsche Bank Downgrades Southern Copper (PCU) to Sell

November 5, 2008 7:37 AM EST

Deutsche Bank downgrades Southern Copper (NYSE: PCU) from Hold to Sell.

Deutsche analyst says, "We are downgrading PCU based mainly on valuation and the stock's impressive rally - PCU has gained 70% in 6 trading days since hitting a low of US$9.84/share on October 27th
compared with a gain of 18% for the S&P500 (and a 39% rally for competitor Freeport-McMoRan (NYSE: FCX) and a 14% move in LME copper prices). Our Price Target of US$10/share continues to be based on 9x 2009E EPS of US$1.08 and, with PCU's stock at US$16.77/share, PCU trades at a rich 2009E PE of 15.5x, or ~2x the multiple of its peer group (7.3x)...Main risks to our outlook are higher-than-expected copper prices, given DB's US$1.89/lb forecast for 2009 is at the low end of consensus (US$1.66-US$3.30/lb range)."

Southern Copper Corporation is an integrated copper producer. The Company produces copper, molybdenum, zinc and silver.

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