On Friday, BofA Securities issued an upgrade for Mineral Resources Limited (ASX:MIN) (OTC: MALRF), shifting the stock's rating from Neutral to Buy. The firm also increased the price target for the company's shares from AUD79.00 to AUD82.00.
The upgrade comes as BofA Securities sees potential for the stock's current price to rise. This outlook is based on the stabilization of spodumene prices and Mineral Resources' efforts to expand production volumes, which are expected to lower unit costs at its Wodgina and Mt Marion operations. While 62% iron ore prices have been volatile, they have been tracking at an average of around $120 per ton for the second half of 2024, which is approximately $10 per ton higher than BofA Securities' forecasts as the financial year-end approaches.
Analysts at BofA Securities have incorporated the anticipated achievement of Onslow's 3.5Mtpa nameplate capacity by the first half of the fiscal year 2026 into their valuation. The additional $200 million proceeds expected from this milestone have also been factored into the firm's analysis.
The revised price objective of AUD82.00 implies a potential total return of 19% for investors. BofA Securities' optimistic stance on Mineral Resources is based on a combination of price stabilization, volume expansion, and the expected financial benefits from reaching production targets in the coming years.
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