Analyst likes Teck best copper play Freeport McMoRan (NYSE:FCX) and Southern Copper (NYSE:SCCO) are in rally mode Thursday, +6.7% and +5.1%, respectively, but Wolfe Research downgraded both names as it takes a generally more cautious view on miners given lower commodity price forecasts.
Wolfe analyst Timna Tanners cut Freeport (FCX) to Peer Perform from Outperform with the stock's fair value at $24-$30, citing lower copper prices and limited growth, with stock buybacks likely cut in half from H1 levels during the second half of the year.
Tanners also slashed Southern Copper (SCCO) to Underperform from Peer Perform with a $47 PT, on lower estimates and limited growth near term, while assuming a dividend cut in 2023.
The analyst is "most constructive" on Teck Resources (NYSE:TECK), as higher coal and oil forecasts more than offsetting lower copper, while staying cautious on (VALE), citing the likelihood of "sharply higher" costs Q/Q, as every $10/bbl move in Brent crude raises the company's freight costs by nearly $1/ton.