Mineral Resources Ltd (ASX: MIN) shares could be a bargain buy right now.
That's the view of analysts at Bell Potter, which have responded positively to the mining and mining services company's quarterly update.
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What is the broker saying about Mineral Resources shares?
According to the note, the broker was pleased enough with its performance during the quarter.
It notes that production was stronger than expected but prices were lower. It said:
Production was generally above our forecasts. Lithium prices declined further during the quarter and were lower than our forecasts. […] MIN noted that the lithium division is profitable at current lithium prices.
Iron ore prices were up 20% qoq. On the 35Mtpa Onslow Iron Project construction, MIN reiterated that the project is well within budget, and on target to deliver first ore-on-ship in June-24.
In light of this, the broker remains very positive on Mineral Resources shares and has reiterated its buy rating on them.
And while its analysts have cut their price target to $75.00 (from $90.00) due to weak lithium prices, this still implies a potential upside of 26% for investors over the next 12 months.
The broker concludes:
Our price Target Price is reduced due to our downgraded lithium price outlook. For 2024, we estimate SC6 prices averaging US$1,100/t (prev. US$2,500/t) and hydroxide prices averaging US$18,125/t (prev. US$32,500/t). EPS changes in this report include: FY24 -26%, FY25 -29%, FY26 -7%.
From June 2024 the Onslow Iron Project is guided to commence its production ramp-up. The project will grow attributable iron ore production by 21Mtpa (more than 100%), and Mining Services volumes by 140Mtpa (~50%, before haul road sell down), leading to significant forecast growth earnings.
