Deutsche Bank Downgrades Southern Copper (SCCO) to Sell, 'Ordinary growth & returns but valuation extraordinary'

November 23, 2022 2:30 AM EST
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Price: $70.94 +3.26%

Rating Summary:
    2 Buy, 11 Hold, 10 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 11 | Down: 16 | New: 24
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(Updated - November 23, 2022 3:10 AM EST)

Deutsche Bank analyst Abhi Agarwal downgraded Southern Copper (NYSE: SCCO) from Hold to Sell with a price target of $45.00.

The analyst comments "Southern Copper (SCCO) shares have outperformed over the last one month (up 23% vs peers up 14%) driven by a rally in copper prices and the relatively in-line Q3/22. However, the updated guidance for 2023 onwards reflects that the company is struggling to get its operations on track after the COVID-related disruptions, as copper and zinc production was downgraded by 50Kt and 30Kt, respectively, while cash cost guidance was increased by ~10%. We believe these issues are not "oneoff" and expect a step-up in sustaining capex and opex to get the operations on track again. SCCO is trading at a premium to peers on spot (2023e EV/EBITDA of 11x vs peers at ~8x), which looks unjustified to us given issues around its growth projects. We downgrade the stock from HOLD to SELL with a 12-month price target of $45."

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 $59.47 yesterday.

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