The Mineral Resources Limited (ASX: MIN) share price is on course to end the week deep in the red.
At the time of writing, the mining and mining services company's shares are down 7% to $48.92.
This means the Mineral Resources share price has now fallen 25% from its July high of $65.38.
Why is the Mineral Resources share price sinking?
The weakness in the Mineral Resource share price has been driven by a pullback in iron ore prices.
Mineral Resources has exposure to iron ore via its Iron Valley Iron Ore operation in the Pilbara and its Koolyanobbing iron ore deposit in the Yilgarn.
According to CommSec, the spot iron ore price fell US$6.90 or 6.1% to US$106.50 a tonne during overnight trade. This is being driven by declining Chinese steel production.
It was thanks largely to sky high iron ore prices that the company reported a 230% increase in underlying net profit after tax to $1,103 million in FY 2021. As a result, the recent weakness in prices appears to have investors concerned that its profits could take a hit in FY 2022.
Is this a buying opportunity?
According to a note out of Macquarie from last week, its analysts appear to see the recent pullback by Mineral Resources' shares as a buying opportunity.
The note reveals that its analysts have an outperform rating and $77.00 price target on the company's shares.
Based on the current Mineral Resources share price, this implies potential upside of 57% over the next 12 months.
And if you include dividends, the potential return on offer gets even juicier. Macquarie has pencilled in fully franked dividends per share of $2.57 in FY 2022 and then $2.29 in FY 2023. These represent yields of 5.2% and 4.7%, respectively, over the next two financial years.
Macquarie likes Mineral Resources due to it offering strong iron ore price leverage and production growth. It also considers the company a key preference for lithium exposure thanks to its huge Wodgina Lithium Operation. Wodgina is one of the largest known hard rock lithium deposits in the world.
All in all, this could make Mineral Resources' shares one to consider when the dust settles.
