The Mineral Resources Limited (ASX: MIN) share price is having a disappointing day on Tuesday.
In morning trade, the mining and mining services company's shares are down almost 2% to $52.82.
Despite this decline, the Mineral Resources share price is still up 38% in 2021.
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Is the Mineral Resources share price in the buy zone?
According to a note out of Bell Potter, its analysts believe the Mineral Resources share price is good value.
This morning the broker reiterated its buy rating and lifted its price target by 25% to $61.85.
Based on the current Mineral Resources share price, this implies potential upside of 17% over the next 12 months before dividends.
And with the broker forecasting a 4.2% dividend yield over the next 12 months, this potential return stretches to over 21%.
Why is Bell Potter positive on Mineral Resources?
Bell Potter has adjusted its iron ore and lithium price forecasts and believes Mineral Resources is well-positioned to benefit.
The note reveals that the broker is forecasting an average benchmark 62% fines iron ore price of US$138 a tonne and a US$715 spodumene concentrate (6%) price in FY 2022.
Bell Potter commented: "MIN is well positioned for forecast changes in iron ore and lithium prices. Pending approvals, MIN's iron ore business is set to expand with new production hubs that will enable strong earnings throughout the pricing cycle. Historically, mines of the scale planned are amongst the most valuable minerals businesses in the market. MIN's lithium business is set to benefit from the expected decarbonisation of the global energy economy, and MIN is positioning to capture further downstream lithium processing margins, by adding additional lithium hydroxide processing capacity."
"In addition to MIN's operations, we ascribe significant value to the project portfolio, which we believe will be further reflected in its share price in the next year, and in accordance with our ratings structure, maintain our Buy recommendation. Changes to our earnings estimates with this update include a 33% increase to CY22e and a 5% and 8% decrease to CY23e and CY24e respectively," it added.
Those upgrades ultimately underpinned the increase in its Mineral Resources share price target by 25% to $61.85.
