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Investing.com - Morgan Stanley (NYSE:MS) downgraded Nexa Resources (NYSE:NEXA) from Equalweight to Underweight on Tuesday, while reducing its price target to $5.00 from $7.00. According to InvestingPro data, the stock has already declined 42% year-to-date, with its current market capitalization standing at $658 million.
The downgrade reflects Morgan Stanley’s less optimistic view on zinc prices, which would impact the mining company’s financial performance. The firm cited its commodity team’s revised outlook as a key factor in the rating change.
Morgan Stanley noted that Nexa Resources continues to face setbacks with the ramp-up of its Aripuanã mine, along with operational issues at other mining facilities. These challenges may make it difficult for the company to achieve its current production guidance.
The investment bank stated it sees no upside to its new $5.00 price target. According to Morgan Stanley’s analysis, Nexa currently trades at 3.8 times its 2026 EBITDA estimate and 13.1 times its 2026 EPS projection.
The firm pointed out that while Nexa’s current price-to-earnings multiple exceeds its five-year average of 11.9x, its enterprise value to EBITDA multiple of 3.8x remains slightly below the historical average of 4.0x.
In other recent news, Nexa Resources S.A. has resumed operations at its Cajamarquilla smelter in Peru after a temporary suspension due to labor negotiations. The company confirmed that normal capacity levels have been restored following successful talks with the labor union representing operator employees. Nexa Resources stated that its 2025 sales guidance remains unaffected by the brief operational halt. Earlier, the smelter’s operations were partially suspended when unionized employees went on strike, although an agreement with the technician’s union was already in place.
Additionally, BMO Capital Markets initiated coverage on Nexa Resources, assigning a Market Perform rating and setting a price target of $6.00. BMO Capital highlighted challenges such as weak smelting margins and the prolonged ramp-up period of the Aripuana project. Despite these issues, the firm expects improvements in the company’s operating cash flow. BMO Capital also noted Nexa Resources’ focus on reducing debt and investments in tailings capacity at its El Porvenir and Atacocha mines. The analysis suggests that while efforts to deleverage could benefit the company, its low stock liquidity remains a concern for larger investors.
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