Sell Rating on Southern Copper Due to Unattractive Valuation and Growth Concerns

Bank of America Securities analyst Caio Ribeiro maintained a Sell rating on Southern Copper (SCCO – Research Report) yesterday and set a price target of $70.00.

Caio Ribeiro’s rating is based on Southern Copper’s recent financial performance and future outlook. The company’s fourth-quarter 2024 results showed an EBITDA of $1.5 billion, which was significantly below both his estimates and the Bloomberg consensus. This was attributed to lower copper volumes and higher-than-expected cash costs per pound, which impacted the company’s earnings.
Furthermore, Ribeiro points to the company’s unattractive valuation metrics, noting an EV/EBITDA ratio of 11.3x and a free cash flow yield of approximately 4% for 2025. Additionally, the forecast for flat copper production in 2025 and increased capital expenditures for projects like Tia Maria raise concerns about future growth potential. These factors collectively contribute to his Sell rating on Southern Copper’s stock.

Ribeiro covers the Basic Materials sector, focusing on stocks such as Vale SA, Southern Copper, and Ternium SA. According to TipRanks, Ribeiro has an average return of -0.9% and a 45.83% success rate on recommended stocks.

In another report released today, Scotiabank also reiterated a Sell rating on the stock with a $52.00 price target.