Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Morgan Stanley Upgrades Teck Resources, Alcoa and Nexa as Value Begins to Emerge

Published 09/16/2022, 03:25 PM
Updated 09/16/2022, 03:30 PM
© Reuters.  Morgan Stanley Upgrades Teck Resources, Alcoa and Nexa as Value Begins to Emerge

© Reuters. Morgan Stanley Upgrades Teck Resources, Alcoa and Nexa as Value Begins to Emerge

By Sam Boughedda

A Morgan Stanley analyst upgraded shares of miners Teck Resources (NYSE:TECK), Alcoa (NYSE:AA), and Nexa Resources (NYSE:NEXA) to Overweight in a note Thursday, stating value is starting to emerge.

However, despite strong balance sheets and cheap valuations, they are only selectively upgrading mining stocks of companies where they see "deep value and/or self-help stories amid persisting macro/China recovery uncertainties."

The analyst said Teck is the firm's Top Pick.

"We are selectively turning more positive on mining equities as most stocks in our coverage trade at increasingly attractive stock valuations — global Metals & Mining stocks' relative valuation stands at 1.4 standard deviations below their historical average — despite strong FCF generation, capex discipline, and low leverage," wrote the analyst.

Teck's price target was raised to $51 from $41, Alcoa's price target was lifted to $66 from $51, and Nexa's price target was lowered to $6.6 from $7.2.

"Macro uncertainties persist with global growth still decelerating, driven by DM and EM ex-China. However, our China economics team forecasts a modest rebound to 5.2% in 2023, up from a below-consensus 2.8% GDP growth this year, as Beijing gradually alleviates housing and Covid overhangs," the analyst explained. "The recovery depends heavily on policy, but the team believes Beijing will likely ramp up policy support for the housing sector, providing additional funding and better-coordinated intervention to ensure contracted home construction is completed. The team expects a gradual exit from Covid-zero next spring. The stimulus targeting the property and infrastructure in China are particularly positive for the M&M sector, as the country accounts for 50% or more of global demand for most metals."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.