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Investing.com - Morgan Stanley (NYSE:MS) downgraded Southern Copper (NYSE:SCCO) from Equalweight to Underweight on Tuesday, while raising its price target to $99.00 from $86.00. The copper giant, with a market capitalization of $80.39 billion, has shown impressive revenue growth of 23.23% over the last twelve months.
The investment bank cited "overdone valuation" as the primary reason for the downgrade, noting that the stock is trading above its historical average and at a premium compared to industry peers.
Morgan Stanley pointed out that Southern Copper currently trades at 12.4 times the firm’s 2026 EBITDA estimates and 23.7 times earnings estimates, exceeding its 5-year average multiples of 10.8x and 20.1x respectively.
The firm also highlighted that while Southern Copper has exposure to COMEX copper prices, this exposure will decline in 2026, potentially reducing its realized pricing more than competitors.
Morgan Stanley specifically noted that Southern Copper does not mine copper in the United States, which could further impact its pricing advantage compared to peers as the exposure to COMEX prices diminishes.
In other recent news, Southern Copper Corporation reported a strong financial performance for the first quarter of 2025, surpassing analysts’ expectations with earnings per share of $1.19, compared to the forecasted $1.10, and revenue of $3.12 billion, exceeding the projected $2.94 billion. The company also noted a 29% year-over-year increase in net income, highlighting its robust operational performance. Despite these positive financial results, UBS downgraded Southern Copper from Buy to Neutral due to valuation concerns, maintaining a price target of $105.00 per share. UBS expressed concerns about potential downside risks to copper prices amid macroeconomic uncertainties and trade tensions, which could affect Southern Copper’s future performance.
At its 2025 Annual Meeting of Stockholders, Southern Copper successfully elected nine directors and received strong shareholder support for amendments to its Directors’ Stock Award Plan. Additionally, the appointment of Galaz, Yamazaki, Ruiz Urquiza S.C. as the company’s independent accountants was ratified. The company also reported a non-binding advisory vote on executive compensation, which was approved by a significant majority of shareholders. These developments indicate continued confidence in the company’s leadership and governance.
Southern Copper remains optimistic about future growth, projecting copper production to exceed 1 million tons by 2028. The company plans significant capital investments, including over $600 million in Mexico for 2025. The positive outlook is supported by expected increases in copper demand driven by advancements in energy technologies and AI infrastructure. However, UBS’s downgrade reflects caution about the company’s valuation and potential market challenges.
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