Mineral Resources Ltd (ASX: MIN) recently released its quarterly update, prompting brokers to take a fresh look at the lithium and iron ore company.
Mineral Resources shares haven't performed particularly well over the past year – they're down almost 5% over the period – but all three brokers are predicting that's about to change.
Before we get to their respective share price targets, let's have a closer look at the company's quarterly results.
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September a record month for iron ore
Mineral Resources said it shipped 9.2 million tonnes of iron ore from its Onslow operations, with September a record month.
On the lithium front, the company sold a record 170,000 tonnes during the quarter, and the company's mining services operations produced a record 103 million tonnes of iron ore.
The company's net debt fell by $0.2 billion to $4.1 billion, and its credit rating was upgraded by Fitch to BB.
Brokers say Mineral Resources shares are looking cheap
Broker UBS said in its research note on Mineral Resources that it was a strong start to FY27 on the production front, "but the earnings read through is tempered by weaker pricing and diesel/transitional costs''.
UBS updated its estimates and reduced its forecast earnings per share by 10%-12% for FY27-FY29, but said long-term lithium and iron ore prices provide valuation support.
UBS has a $72 price target for Mineral Resources shares, compared with the share price of $42.50 at the time of writing.
Broker Morgans was much less optimistic about the share price outlook, lowering its price target to $61 from $65.
Morgans said it was, "another encouraging result operationally, with volume beats across every operation bar Mt Marion and costs at or below forecasts at most sites''.
The broker added:
Lower commodity prices in our view have weighed on sentiment and the share price. Bald Hill is marginal at current prices, and higher diesel adds about $1/wmt at Onslow, about $2/wmt at Pilbara Hub and about $20/t spodumene equivalent for lithium from October (Mining Services is protected as clients supply fuel). Despite this, net debt continues to decline, leverage is well below target with no maturities until October 2028, and the POSCO sell-down is still expected this half pending third-party consents.
Morgans said the mining services division, "offers a solid cushion to Mineral Resources' earnings and cash flows through periods of commodity price weakness''.
Macquarie, meanwhile, has a price target of $74 on Mineral Resources shares.
The Macquarie team was impressed by the strong performance at Onslow and the Wodgina lithium operations.
