Up 51% from their 52-week low, is it too late to buy Mineral Resources shares?

Mineral Resources has been on a tear since mid-January. Do these top brokers think it's too late to buy?

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Mineral Resources Ltd (ASX: MIN) shares have been on a tear since mid-January, when the ASX 200 mining stock hit a 52-week low of $52.52.

That was back on 22 January, and since then, Mineral Resources shares have had one heck of a rebound.

At the time of writing on Friday, they're up 0.59%, trading at $78.45 after touching a 52-week high of $79.27.

In fact, the S&P/ASX 200 Materials Index (ASX: XMJ) is the only market sector in the green on Friday following news of A$210 billion of economic stimulus in China which is likely to boost iron ore demand.

The rest of the market seems to be cooling off from yesterday's excitement. The S&P/ASX 200 Index (ASX: XJO) is limping along on Friday afternoon, carrying a 0.72% loss.

Now, back to Minerals Resources shares and whether it's too late to buy them after this recent run.

Is it too late to buy Mineral Resources shares?

The answer to this question depends on who you ask.

First to top broker, Morgan Stanley.

Earlier this month, the broker upped its share price target on Mineral Resources shares by 24% to $83.

So by this measure, Mineral Resources shares still have a little bit of upside to offer at 4.8%.

Next, Bell Potter.

Its analysts retained their buy rating on Mineral Resources shares in a note published in late April.

They raised their 12-month share price target to $85. So, the potential upside is a tad better at 7.35%.

Bell Potter liked the company's quarterly update released on 24 April.

The broker noted sales volumes were above its own forecasts and it was happy to see the recommencement of spodumene concentrate sales from the Wodgina lithium mine.

Mineral Resources also reported an improvement in its spodumene prices at the end of the quarter with a 22,000 tonnes shipment sold at US$1,300 per tonne for SC6 equivalent. This compares to the quarterly average of US$1,030 per tonne.

Another positive was the Onslow Iron Project remaining on track to export its first ore in June.

Finally, we look to Goldman Sachs for their view on Mineral Resources shares.

It's vastly different from Bell Potter and Morgan Stanley.

Mining giant has 40% potential downside from here

Goldman not only has a sell rating on Mineral Resources, it also thinks the shares were too expensive to buy at their 52-week trough!

The broker has a 12-month share price target of $47 on Mineral Resources today. This implies a significant potential downside of 40% over the next 12 months.

This broker had a different take on the company's quarterly report, noting that lithium and iron ore production and realised prices had not met Goldman's own forecasts.

However, Goldman still likes the company and its track record for delivering impressive returns.

The broker commented:

We continue to highlight that MIN has an impressive 20-yr track record of generating high returns on capital with an average ROIC of >20% since listing.

This has been achieved through MIN's ability to build and operate crushing plants and mining projects faster and at lower capital intensity than most other companies.

Despite this impressive track record, we continue to rate MIN a Sell …

Goldman said the reasons for its sell rating included Mineral Resources being fully valued compared to its peers. It is also trading well above its net asset value (NAV), which Goldman places at $54.60 per share.

The broker also cited its expectations of further falls in lithium prices.

This, coupled with higher capex costs at Onslow, leads the broker to believe that Mineral Resources will generate low or negative free cash flow in FY24 and FY25.

Goldman also says the company's balance sheet is "highly geared but debt covenant light".

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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