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.
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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.
