Once again a number of Australia's leading brokers have been busy analysing recent data and adjusting their discounted cash flow forecasts.
Three resources shares have clearly impressed brokers enough this week to receive upgrades. They are as follows:
Independence Group NL (ASX: IGO)
This diversified mining company has been upgraded to an overweight rating by analysts at Morgan Stanley. According to the research note its analysts prefer Independence to rival Western Areas Ltd (ASX: WSA), believing the additional mine life and higher production from its Nova project sets them apart. Whilst I would agree with Morgan Stanley that it is the better of the two, I wouldn't be in a rush to invest. I expect both gold and nickel prices to remain subdued for the foreseeable future.
South32 Ltd (ASX: S32)
A research note out of UBS reveals that its analysts have upgraded the mining giant to a buy rating. UBS believes that metallurgical coal and manganese prices have stabilised, making South32 an attractive investment. I really like South32 and prefer it to BHP Billiton Limited (ASX:BHP). Although its shares rallied strongly last year, I feel confident there could be further gains in 2017 if coal and manganese prices do find their feet again.
Sandfire Resources NL (ASX: SFR)
Analysts at Ord Minnett have upgraded the miner to a buy rating. According to the release its analysts have raised their short-term base metal price forecasts due to supply disruptions and growing demand. If base metal prices do rise this year and next as they predict, Sandfire is likely to benefit greatly. But it is worth remembering that at this stage these are just forecasts and if the predicted price increases fail to materialise, Sandfire's shares could come under reasonably heavy selling pressure.
