6 ASX mining shares just upgraded by brokers

But there's a fly in the ointment.

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
  • Investors are loving ASX mining shares right now, with the S&P/ASX 300 Metals & Mining Index up by almost 25% in just three months 
  • These stocks have been upgraded by the pros today
  • But there's a fly in the ointment -- many of these ASX mining shares are already trading above the brokers' raised valuations 

A collection of ASX mining shares have been upgraded by various brokers today.

While the upgrades demonstrate increased confidence in these ASX mining shares, many are already trading above the brokers' raised valuations.

Over the past three months, the S&P/ASX 300 Metals & Mining Index (ASX: XMM) has increased by almost 25%.

Investors are likely more enthusiastic about ASX mining shares now that China has dumped its COVID-19 Zero policy. This significantly disrupted the Chinese economy and affected demand for our exports.

A group of people in suits and hard hats celebrate the rising share price with champagne.

Image source: Getty Images

Which ASX mining share got the biggest price forecast bump?

According to The Australian, Goldman feels a lot more confident about the prospects for ASX copper share Sandfire Resources Ltd (ASX: SFR).

The broker has raised its 12-month share price target by a whopping 38% to $4.50. But Sandfire shares are already trading well above this at $6.20, down 1.12% at lunchtime on Friday.

Goldman has also upgraded its share price target on ASX iron ore share Champion Iron Ltd (ASX: CIA) by 22% to $8.40.

Champion Iron shares are swapping hands for $7.76 today, up 0.91%. So, there's a bit of potential upside available for investors here.

The broker has also raised its price target for South32 Ltd (ASX: S32) shares by 17% to $4.20. South 32 shares are already above this point, trading at $4.64 today, up 1.98%.

Conversely, Credit Suisse is not so confident and has cut its recommendation on South 32 shares to neutral.

Goldman upped its price target for BHP Group Ltd (ASX: BHP) shares by 12% to $48.10. But investors are more bullish, pushing BHP shares to $49.89 today, up 1.03%.

Goldman also backs ASX coal share New Hope Corporation Limited (ASX: NHC).

The team has raised its price target on New Hope shares by 26% to $4.90. But the New Hope share price has soared well beyond this to $6.27, up 5.91% on no news from the company at all today.

At the time of writing, it's the top-performing share on the S&P/ASX 200 Index (ASX: XJO) today, according to ASX data.

They've also raised their forecast for the thermal coal price by 18% to US$275 per tonne for 2023.

Goldman also sees Rio Tinto Limited (ASX: RIO) heading 9% higher to $130 per share. Rio Tinto is currently trading at $122.85 per share, up 1.39% today.

Barclays has raised its recommendation on Rio Tinto shares to equal weight.

What's got the brokers positive on ASX resources stocks?

In a new note, Goldman Sachs says it is forecasting a commodity price recovery in the second half of FY23:

While we continue to think 1Q23 will be a tough quarter for base metals and steel due to ongoing weak European and global demand, our expectation of a China reopening in 2Q, extreme lows in global base metal inventories and ongoing supply side disruptions make us positive on a 2H commodity price recovery.

Goldman said it was "most positive" on 62% fe and high-grade iron ore, as well as coking coal, due to an expected increase in Chinese steel production.

The broker is also optimistic about copper, aluminium, and zinc due to low global inventories and supply-side disruptions.

It cites copper production issues in Chile and a "slow restart of European aluminium and zinc smelters" as reasons for the shortages right now.

Motley Fool contributor Bronwyn Allen has positions in BHP Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Barclays Plc. 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 Resources Shares

Two young male miners wearing red hardhats stand inside a mine and shake hands.
Resources Shares

Copper has overtaken iron ore – Here are the top copper shares to target

Here's how to gain exposure.

Read more »

Piles of increasing coins on Australian $100 notes.
Dividend Investing

Bought $10,000 worth of BHP shares 5 years ago? Guess how much passive income you've already earned

This is why BHP shares have long been popular among ASX passive income investors.

Read more »

Two miners at a mine site on their tablets, with mining machinery behind them.
Share Fallers

Why has the Mineral Resources share price fallen 12% this week?

It’s been another tough week for Mineral Resources shareholders.

Read more »

A man in a hard hat and high visibility vest speaks on his mobile phone in front of a digging machine with a heavy dump truck vehicle also visible in the background.
Resources Shares

South32 vs Rio Tinto: 2 popular ASX mining shares compared

South32 and Rio Tinto: which mining giant would I buy for yield, growth, or value right now?

Read more »

Mining workers in high vis vests and hard hats discuss plans for the mining site they are at as heavy equipment moves earth behind them, representing opportunities among ASX 200 shares as nominated by top broker Macquarie
Resources Shares

Woodside Energy vs Fortescue: Which ASX mining share is best for passive income?

Comparing Woodside and Fortescue for passive income: yield, reliability, and share price momentum.

Read more »

Man analysing a stock market chart, with more data on his laptop and table.
Resources Shares

South32 shares fall 10% from all-time high: Is the rally over?

Find out if the ASX mining shares are a buy, sell, or hold now.

Read more »

A miniature moulded model of a man bent over with a pick stands behind a sign that has lithium's scientific abbreviation 'Li', with the word lithium underneath it against a sparse bland background.
Resources Shares

Could this evolving development smash ASX lithium shares like Liontown, Mineral Resources and PLS?

Buying ASX lithium shares? You’ll want to keep reading…

Read more »

Two work colleagues looking at a laptop and discussing something.
Resources Shares

Should I buy Rio Tinto shares for passive income?

I take a closer look at the dividend forecasts and valuation behind this popular income share.

Read more »