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The South32 Ltd share price is sinking on broker downgrades

Shares in diversified metals and mining company South32 Ltd (ASX: S32) are down 3.6% at the time of writing to $3.20 after a downward spiral notable since February 12.

South32 is a BHP Billiton Limited (ASX: BHP) cast off that has performed strongly since its mid-2015 ASX debut, but the last week has not been kind to the mid-weight manganese, nickel, lead, zinc and coal producer.

The announcement of half-year results on February 12 coincided with South32’s slide into the red, despite the company revealing it would return US$378 million to shareholders in dividends.

South32 did log a profit drop, down 12% on the same period last year, and investors are likely shaken by two broker downgrades to cap off last week, with Macquarie Group Ltd (ASX: MQG) issuing an underperform rating on February 16 and a Morgan’s price target of just $2.97 on the same day.

Some of South32’s mining peers have also started the week in the red, with BHP Billiton at the big end of town opening down 1.4% at $31.06, Orocobre Limited (ASX: ORE) down slightly to $6.68 from Friday’s close of $6.72, St Barbara Ltd (ASX: SBM) marginally down to $3.86 and Rio Tinto Limited (ASX: RIO) slipping 0.3% to $82.22.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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