Stifel analyst Alex Terentiew thinks “the world needs more copper to meet its demand growth aspirations,” leading to enticing investment opportunities for investors.
“Despite indications globally of slowing industrial activity and declining investor sentiment, copper prices have held ground, down 1 per cent year-to-date, solidly outperforming most other industrial commodities, most of which are down more than 10 per cent,” he said. “In our view, copper prices may have overshot to the upside in Q1 on strong expectations of a global economic recovery, with a subsequent price retreat on weaker economic data in April. Copper’s relative out performance, however, we view as an indication of market tightness and a robust longer-term outlook driven by both supply challenges and strong demand.”
Calling “Dr. Copper, one of the most reliable indicators of global economic activity,” Mr. Terentiew resumed coverage of five base metals miners in a research report released on Friday after raising his long-term forecast for copper to US$4.20 per pound from US$4.
They are:
Lundin Mining Corp. with a “buy” rating and $13 target. Average: $10.95.
Analyst: “Consolidating and Growing in the Andes. Although many investors prefer certainty and a low-risk profile, Lundin’s growing presence in Chile and Argentina, we believe, provides substantial upside potential with a reasonable risk profile. Lundin Mining, keeping in line with its founder’s history, is actively progressing an early mover advantage to unlock substantial potential value and deliver the benefits consolidating operations in that part of the Andes can bring to stakeholders. Ultimately, we expect Lundin to be part of a consortium of companies that unlocks this potential and creates a new, world-class mining district.”