Goldman Sachs downgraded Southern Copper (NYSE:SCCO) to Sell from Neutral while slightly increasing its price target to $66.00 from $65.00, noting that the stock has run ahead of fundamentals (significantly outperformed copper prices by 28% YTD) and is fully valued now. Shares closed more than 5% lower today.
According to the firm, it continues to prefer copper exposure on a long-term basis and views Southern Copper as offering investors exposure to high-quality copper assets. However, the downgrade move follows strong outperformance vs. the key commodity and peers, a still elevated holding discount to GMEX, and limited positive catalysts ahead.
The company adjusted its projected EBITDA figures for the years 2023, 2024, and 2025, lowering them by -1%, 0%, and -1% respectively. The reason for this revision is due to a slight decrease in expected production and lower revenue from copper and molybdenum in 2023. The firm also revised its capex forecast downwards for 2024/25, based on the company’s new guidance.