The Mineral Resources Limited (ASX: MIN) share price has been a very disappointing performer in recent months.
Since peaking at a record high of $65.38 in July, the mining and mining services company's shares have tumbled 39% to $40.15.
Why has the Mineral Resources share price tumbled?
A few months ago, things were looking incredibly positive for the Mineral Resources share price. Iron ore prices were at sky high levels and lithium prices were booming and on an upward trajectory.
However, since then, while lithium prices have strengthened, the price of iron ore has fallen heavily.
This is particularly the case for the low grade iron ore that Mineral Resources is exposed to. And, as with the Fortescue Metals Group Limited (ASX: FMG) share price, this has put significant pressure on the company's shares.
Is this a buying opportunity?
The team at Citi appear to believe the weakness in the Mineral Resources share price could be a buying opportunity.
In fact, based on the broker's price target, the company's shares could arguably be classed as a bargain right now.
According to the note from earlier this week, Citi has retained its buy rating but trimmed its price target on the company's shares to $55.00.
Based on the current Mineral Resources share price, this implies potential upside of 37% for investors over the next 12 months.
And that doesn't include dividends. Citi also expects a fully franked dividend of $1.27 per share in FY 2022. If you include this, the total potential return increases to over 40%.
What did the broker say?
Citi was pleased with the company's performance during the first quarter of FY 2021 and is positive on the future thanks to its lithium plans. The broker expects this to offset any weakness from its iron ore operations in the future.
It commented: "MIN achieved good production performance, announced commercial production from the Kemerton lithium hydroxide plant by mid-2022, and that mining would restart at the Wodgina lithium mine in Q1FY23. The price received for its Mount Marion lithium concentrate was double the average price received in FY21."
"However, this was overshadowed by a large contraction in iron ore demand (MIN's dominant revenue earning product over the last twelve months), the resulting iron ore price decrease, and increases in grade and quality discounts applied to MIN's ~58% Fe product."
Positively, though, the broker believes recent policies in China will put a floor on iron ore prices. It appears to believe that this should allow investors to start focusing more on its burgeoning lithium operations, rather than worrying about falling iron ore prices.
