Buy Minerals Resources shares for 21% upside: broker

Big earnings growth is expected from this mining share in the coming years…

Key points
  • Mineral Resources shares have almost doubled in value over the last 12 months
  • One leading broker believes its shares can keep rising from current levels
  • It expects strong earnings growth to be the catalyst for this

Mineral Resources Ltd (ASX: MIN) shares are on course to end the week on a positive note.

In afternoon trade, the mining and mining services company's shares are up 1% to $90.96.

This means the Mineral Resources share price is now up over 90% since this time last year, as you can see below.

Happy man in high vis vest and hard hat holds his arms up with fists clenched.

Image source: Getty Images

Can Mineral Resources shares keep rising?

The good news is that one leading broker doesn't believe it is too late to jump on the Mineral Resources train.

In fact, its analysts believe that train is going to chug meaningfully higher from current levels over the next 12 months.

According to a note out of Bell Potter, its analysts have a buy rating and $110.00 price target on its shares.

Based on the current Mineral Resources share price, this implies potential upside of 21%.

Why is Bell Potter bullish?

Bell Potter was impressed with Mineral Resources' first-half performance, noting that it generated more profit during the six months than it did in the entirety of FY 2022. It said:

Revenue was $2,350m (vs BPe $2,163m). Underlying EBITDA: $939m (vs BPe $901m). Net profit after tax: $390m (vs BPe $399.3m), already exceeding the FY22 full year result.

But the broker doesn't expect its earnings growth to stop there. Far from it! Its analysts conclude:

We maintain our Buy recommendation and Target price. Over the next two years we forecast that as the business transformation is completed, MIN's growing production volumes, and improving margins, supported by strong commodity prices, will result in significant earnings growth. In addition to growth in lithium, MIN is undertaking significant Iron Ore growth at the Onslow Iron Project, and developing its Energy business.

It is also worth noting that Bell Potter expects this to underpin a $9.39 per share dividend in FY 2024. This represents a 10.3% dividend yield at current prices.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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