Dahlman Rose Downgrades Southern Copper (SCCO) to Sell; Significant Exposure to Peru Adds Element of Risk

Dahlman Rose downgraded Southern Copper (NYSE: SCCO) from Hold to Sell with a price target of $28.00.

Dahlman analyst says, "Shares of Southern Copper have risen nearly 20% so far in 2012 (versus a 5% move in the S&P) in response to a 12% rise in copper prices over the same period. Currently, the shares trade at roughly a 7.5x EV/EBITDA multiple to our 2013 EBITDA estimate, compared to Freeport (NYSE: FCX) shares that trade at just over a 3.5x multiple, a premium that we do not feel is justified. Though the company maintains several quality assets, roughly 50% of its production and a large portion of its growth projects are based in Peru, which has shown increasing signs of political and social instability related to mining operations. Though company management believes that its $1 Bn Tia Maria project (120,000 mtpa capacity) will ultimately be developed, the social and political response to its previous attempts to gain approval does not provide much confidence, in our opinion."

For an analyst ratings summary and ratings history on Southern Copper click here. For more ratings news on Southern Copper click here.

Shares of Southern Copper closed at $36.09 yesterday.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Lowe's (LOW) PT Lowered to $275 at Guggenheim
• BofA's Hartnett sees dollar slump, risk selloff if bond intervention fails
• Target (TGT) PT Raised to $175 at Guggenheim