UBS Upgrades Mineral Resources to Buy with 20% Upside Potential

Highlights:

• UBS upgrades Mineral Resources (ASX: MIN) from ‘sell’ to ‘buy’ with a $28.60 price target.
• Stock prices suggest MinRes is factoring in $US80/t iron ore and $US1,300/t spodumene.
• Shares jumped 11.57% to $24.49, with a morning rally to $23.60.

Double Upgrade and Revised Price Target

Mineral Resources Limited (ASX: MIN) has received a significant rating upgrade from UBS, shifting from a “sell” to a “buy” recommendation. The investment bank also raised its price target for the stock to $28.60, suggesting a 20% upside from current levels.

Governance Concerns Addressed

UBS acknowledged that governance concerns surrounding company founder Chris Ellison remain, but noted that Mineral Resources has taken sufficient steps to mitigate these issues. While uncertainties persist, the broker believes the company is on the right track.

Valuation Based on Commodity Prices

The UBS analysis estimates that MinRes shares are currently pricing in iron ore at $US80 per tonne and spodumene at $US1,300 per tonne. If spot prices hold steady, the firm sees a fair value of $32.30 per share, indicating further potential upside.

Strong Market Reaction

At the time of writing, Mineral Resources’ stock has surged 11.57%, trading at $24.49, with a 7.5% rally on Monday morning that pushed it to $23.60.

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