27% upside and 5 other reasons to buy this ASX 200 lithium share: top brokers

Let's check the outlook for this diversified mining company.

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Key points

  • The Mineral Resources share price has dropped around 5% year to date
  • But brokers have a positive view on the company
  • Analysts like its exposure to multiple commodities, including iron ore and lithium 

ASX 200 lithium share Mineral Resources Ltd (ASX: MIN) has fallen in the year to date, so is now the time to buy?

The company's share price has slid nearly 5% from $77.20 at market close on 30 December to $73.28 at the closing bell on Friday.

Let's check the outlook for this ASX 200 lithium share.

Is Mineral Resources a buy?

Mineral Resources is not just an ASX 200 lithium share. The company also has iron ore and energy operations in Western Australia.

Analysts at Morgans have placed an add rating and a $93 price target on the company. This implies an upside of 27% based on the latest closing price.

Commenting on the outlook for Mineral Resources, Morgans said:

We see MIN's lithium and iron ore market exposures as an ideal combination to benefit from the China re-opening increase in demand during 1H CY23.

We also see MIN as well placed to grow into its valuation, even if we see unexpected metal price volatility, given the magnitude of organic growth in the pipeline.

The broker noted Mineral Resources is a "founder-led business and top tier miner and crusher" that has "grown consistently" despite barely issuing a share in the last decade. Billionaire Chris Ellison founded Mineral Resources and remains the company's managing director.

The team at Morgans added:

Also helping our investment view is that MIN's diversification leaves it far more capable of tolerating volatility in lithium markets than its peers in the sector. 

Mineral Resources is also a buy recommendation in the eyes of Fairmont Equities managing director Michael Gable.

Gable noted weak iron ore and lithium prices contributed to Mineral Resources shares falling from late January to early June, but now these commodities are recovering.

Commenting on Mineral Resources, he said:

Recently, lithium and iron ore prices appear to be finding support.

The share price of this diversified resources company is also bottoming on the chart. Mineral Resources is potentially a good entry point around recent levels

Meanwhile, on Friday, Mineral Resources provided an exploration and lithium update. The company has found a "significant natural gas discovery" at North Erregulla Deep-1.

The company also advised early results at the Mt Marion lithium mine confirm "significant exploration potential".

Share price snapshot

The Mineral Resources share price has soared 37% in the past year.

This ASX 200 lithium share has a market capitalisation of about $14.2 billion based on the latest share price.

Motley Fool contributor Monica O'Shea 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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