Investing in Australian mining stocks can be lucrative, but which ones to buy?
This week I've sifted through the reports released by UBS and come up with two companies their analyst team believes are deeply undervalued.
Let's see who they like.
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Lynas Rare Earths Ltd (ASX: LYC)
Lynas shares are up a healthy 51% over the past 12 months but have experienced some weakness over the past three months.
The stock was sold off recently after reporting its fourth quarter results, despite booking $288.9 million in quarterly revenue, significantly up on the $170.2 million it booked for the same quarter last year.
Lynas Chief Executive Officer Pol Le Roux said the quarter, "saw the continued focus on the efficient operation of our $1.5 billion investment in new capacity which was completed as part of the Lynas 2025 growth initiative''.
UBS said the company's production of 1857 tonnes of neodymium fell short of their expected 2200 tonnes, "with the operational weakness impacting sales volumes and in turn revenue''.
UBS added:
Positively, the market continues to improve and combined with LYC's leading position in ex-China rare earths production and focus on heavies will play in LYC's favour into the medium-term.
UBS said Lynas management expressed confidence that their production issues were temporary, "highlighting a combination of work through the flow sheet that will help improve operational performance going forward".
UBS lowered their price target for Lynas shares from $23.45 to $22.75; however, this is still well above the current share price of $15.25. The price target would be a 49% return if achieved.
Westgold Resources Ltd (ASX: WGX)
Westgold's share price performance recently mirrors that of Lynas, with a strong performance over a 12-month period, up 67.4%, but a weaker performance over the past three months also.
But in contrast, Westgold which also reported its quarterly results in past days, beat its guidance, producing 387,354 ounces of gold compared to guidance of 345,000-385,000 ounces.
Westgold Managing Director Wayne Bramwell said it was a defining year for the company.
He added:
Over the past two years, we have simplified our portfolio, focused on our highest return assets and prudently allocated capital on key projects and infrastructure that enables future growth. In FY26, this strategy delivered record annual production of 387,354oz, above our guidance range, achieved our cost guidance, and placed Westgold in the strongest treasury position in its history. Improving operational delivery generated an underlying cash build of $233M for the quarter, with Westgold closing FY26 with $939M in cash, bullion and liquid investments. We remain debt free, unhedged and with the financial strength to fund both organic growth, and ongoing return of capital to our shareholders.
UBS ran the ruler over the results, and lowered its price target on the company due to expected lower gold grades at one of its operations.
UBS now has a price target of $7.75 on Westgold shares, compared to $4.80 currently. This would be a 61.4% return if achieved.
