Broker upgrade fails to stop the OZ Minerals share price from falling today

The copper price has dived on fears of a looming global recession.

| More on:
Broker looking at the share price on his laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The OZ Minerals share price is underperforming today due to the weakening copper price
  • An upgrade by Morgans is cushioning the blow as the broker thinks the shares are "far too oversold"
  • While the broker is urging longer-term value investors to buy the shares, it thinks the OZ Minerals share price could remain on the back foot for a while yet

The OZ Minerals Limited (ASX: OZL) share price is taking a belting this morning even after a leading broker upgraded its shares.

Shares in the copper miner fell around 5% in early trade – making it one of the worst performers on the S&P/ASX 200 Index (ASX: XJO).

The silver lining is that its shares recovered some ground to be down 1.26% at $17.23 at the time of writing.

OZ Minerals share price looking too cheap to ignore

The upgrade by Morgans may be helping. The broker lifted its recommendation on the OZ Minerals share price from hold to add, as it believes it is "far too oversold".

OZ Minerals has shed a whopping 40% in value since the start of this calendar year.

Technical issues at its Carrapateena project, rising costs, and a weakening outlook for copper have weighed on the miner.

Recession fears tarnishing the copper outlook

The copper price has dived on fears of a looming global recession. It wasn't that long ago that experts were forecasting supply constraints, but a recession would limit demand for the metal.

While Morgans acknowledges that uncertainties remain, it believes the outlook for the red metal isn't as bad as some might believe.

The broker explains:

The long-term structural drivers appear intact despite marginal investors selling uncertainty. Despite short-term opacity, we note several macro shocks in recent years have proved compelling entry opportunities.

What is the OZ Minerals share price worth?

The opportunity looks even more compelling given where the OZ Minerals share price is currently sitting. The miner traded up to 1.3 times net present value (NPV) through 2021 due to over-excitement about "green metals", which prompted Morgans to slap a hold on the shares.

But OZ Minerals is currently on 0.76 times NPV. The broker calls this "excessively cheap". It also noted that the OZ Minerals share price has rebounded from these levels before during similar sell-offs.

Morgan's 12-month price target is $23.12, which implies a more than 30% upside to the OZ Mineral's share price.

Catching a falling knife  

However, Morgans warned would-be buyers that it may be "tactically prudent" for traders and short-term investors to wait. This is because the OZ Minerals share price could fall further in this climate of fear.  

OZ Minerals isn't the only company under this dark cloud. Fellow copper producers Sandfire Resources Ltd (ASX: SFR) and South32 Ltd (ASX: S32) have also fallen out of favour, down 4% and 5% respectively.

Motley Fool contributor Brendon Lau has positions in OZ Minerals Limited, Sandfire Resources NL, and South32 Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

thoughtful investor sitting at computer
Healthcare Shares

What are brokers saying about CSL shares after the selloff?

The biotech giant's shares hit a 52-week low yesterday. Is this a buying opportunity?

Read more »

A young woman drinking coffee in a cafe smiles as she checks her phone.
Broker Notes

Beginner investors: 3 top Australian shares to buy for 2025

Analysts think these shares are buys and offer plenty of upside.

Read more »

a female steel worker wearing a high visibility vest with her protective helmet tucked under her arm smiles as she carries a clipboard in a large warehouse of steel products.
Earnings Results

Looking at BlueScope shares? Here's your half-year results preview

What is the market expecting for the first half?

Read more »

A young boy wearing a hat, sunnies and striped singlet looks fierce and flexes his arm in victory.
Broker Notes

Experts reveal 4 ASX small-cap shares to buy now

ASX small-cap shares are slightly outperforming the broader market in 2025.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Broker Notes

Where to invest $10,000 into ASX 200 shares this month

Analysts are bullish on these names. Let's find out why they rate them as buys.

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

An angry man struggles with a broken zip in his jacket
Broker Notes

Zip shares have slumped 26% in 2025. Time to consider buying?

Should investors buy now or wait til later with this stock?

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »