The S&P/ASX 200 Index (ASX: XJO) mining stock Mineral Resources Ltd (ASX: MIN) suffered a painful reaction to its FY25 half-year result last week.
The company's two key commodities — iron ore and lithium — were both negatively impacted by price drops over the last 12 months, which led to a difficult HY25 report.
Mineral Resources reported that its revenue declined 9% to $2.3 billion, underlying operating profit (EBITDA) fell 55% to $302 million, underlying net profit sank 200% to a loss of $196 million and statutory net profit plunged 252% to $807 million.
The statutory net profit suffered $352 million of post-tax impairment charges, primarily related to Bald Hill and $232 million of post-tax translation impacts on foreign-currency-denominated balances.
What to make of the result and the Mineral Resource share price?
According to reporting by the Australian Financial Review, broker Barrenjoey recently upgraded the ASX 200 mining stock to overweight, meaning a buy, saying the market sold off the business too heavily.
Barrenjoey suggested that the Mineral Resources share price sank 20% when it reported because the miner said the capital expenditure for its Onslow iron ore project will be $400 million higher and that there will be a three-month delay to reach its nameplate capacity (suggested project production capacity).
The broker suggested that the negative update should have led to a decline of around $630 million from the company's market capitalisation rather than the $1.2 billion hit the business actually took.
According to the AFR, Barrenjoey head of mining research Glyn Lawcock said:
We believe the market has overreacted and is now factoring in an Onslow outcome that is materially below company guidance.
In light of the FY25 half-year result and the Onslow news, Barrenjoey reduced its price target on Mineral Resources stock to $35, down from the former price target of $42. That's a decline of around 17%.
A price target is where a broker thinks a share price will be trading in 12 months from the time of the investment call. Therefore, Barrenjoey is suggesting the ASX 200 mining stock could rise by close to 30% in the next year.
Time will tell if the company is able to deliver on this expectation.
ASX 200 mining stock valuation snapshot
Following a period of heavy governance scrutiny, the Mineral Resources share price has sunk more than 60% since May 2024.
