The Mineral Resources Ltd (ASX: MIN) share price is having a subdued finish to the week.
In morning trade, the mining and mining services company's shares are down 2.5% to $92.00.
Why is the Mineral Resources share price under pressure?
The weakness in the Mineral Resources share price on Friday appears to have been driven by a broker note out of Goldman Sachs.
That note reveals that the broker believes the company's shares have peaked for the time being.
According to the note, Goldman has downgraded the company's shares to a neutral rating with a reduced price target of $87.00.
This implies potential downside of almost 6% from current levels.
Why did Goldman downgrade Mineral Resources?
While Goldman was a touch underwhelmed with the company's quarterly update, the main reason for the downgrade was its valuation following some strong gains in recent months. This can be seen on the chart below.
In respect to its quarterly performance, the broker said:
MIN reported a mixed Dec Q with better than expected iron ore and lithium spodumene pricing, but lower than expected iron ore and lithium sales volumes and Li hydroxide pricing at Wodgina. Guidance for FY23 is unchanged except for Mt Marion spodumene which has been downgraded slightly on the back of a slight delay to the expansion project (600ktpa to 900ktpa) ramp-up to July.
As for its valuation, its analysts highlight that the Mineral Resources share price had rallied a massive 58% since they put a buy rating on it. This has taken it to 1.2x net asset value, which is beyond what they believe is a fair valuation. Goldman adds:
With our updated estimates and PT we downgrade MIN to Neutral (from Buy) […] Since upgrading MIN to a BUY on 11 April 2022, the stock is up ~58% vs. the ASX200 roughly flat (-0.2%) over the same period.
