SCCO Copper Supply Tightness Is Expected To Drive MultiYear Upside

Analysts have raised their price target for Southern Copper significantly, with fair value estimates climbing from approximately $125 to $172. This reflects higher copper price forecasts, tightening supply into 2026, and modestly stronger long term growth and profitability assumptions.

Analyst Commentary

Recent Street research points to a steadily improving outlook for Southern Copper as bullish analysts recalibrate their models around a structurally tighter copper market and rising long term price expectations. While views on valuation remain mixed, there has been a clear upward drift in price targets and a shift in ratings that acknowledge both the strength of the company’s asset base and the supportive commodity backdrop.

Several firms now see recent supply disruptions at major global mines tightening the copper market into 2026, which in turn underpins higher copper price decks and upgraded earnings forecasts for Southern Copper. This backdrop is feeding into higher estimates for EBITDA and free cash flow over 2025 to 2026, and into a growing recognition that the stock offers direct leverage to a multi year copper upcycle.

At the same time, there is an emerging consensus that Southern Copper can sustain robust shareholder returns through the cycle. Expectations for strong free cash flow and continued support for its elevated mixed stock and cash dividend framework are key pillars of the more constructive stance, even among analysts who prefer other copper names on valuation grounds. Overall, the tone of recent research suggests that downside scenarios tied to supply growth and project execution risk are being discounted less aggressively than earlier this year, as the market begins to price in a tighter, higher price environment for copper.

Bullish Takeaways

• Bullish analysts have raised price targets into a range broadly between the low $100s and the mid $150s, arguing that current valuation still does not fully reflect upgraded copper price assumptions and higher medium term earnings power.
• Rating upgrades from previously cautious positions to more neutral stances highlight reduced underperformance risk, with tighter global copper supply and limited alternatives for copper exposure cited as catalysts for a re rating in the shares.
• Higher copper price decks for 2025 to 2026 are driving increased EBITDA and free cash flow forecasts, supporting the case for sustained capital returns and a premium multiple relative to historical averages.
• Despite some preference for peers on near term valuation, constructive commentary on Southern Copper’s asset quality, cost position, and dividend profile reinforces the view that the company is well positioned to capture upside in a prolonged copper bull market.

What's in the News

• The U.S. Department of the Interior has added copper to its updated list of critical minerals. This elevates the strategic importance of Southern Copper's core product and may influence future tariff and supply chain policies (Financial Times).
• Southern Copper reports third quarter 2025 production with lower copper volumes year over year but higher output of molybdenum, zinc, and silver, reflecting a more diversified metals mix.
• The Board has authorized a higher quarterly cash dividend of 0.90 per share plus a 0.0085 share stock dividend per common share, reinforcing the company's stated focus on shareholder returns.
• A new 1.0085% stock dividend set for November 12, 2025, further supplements total shareholder payout alongside the regular cash dividend.
• The company announced the completion of a long running buyback program totaling 119,497,767 shares, or 13.68% of shares outstanding, with no additional repurchases in the latest quarter.

Valuation Changes

• The fair value estimate has increased significantly from approximately $125 to about $172 per share, reflecting a meaningfully higher intrinsic value assessment.
• The discount rate has risen modestly from about 7.6% to roughly 8.2%, implying a slightly higher required return and risk assumption in the updated model.
• Revenue growth has been raised notably from around 4.9% to approximately 8.3% annually, indicating stronger expectations for top line expansion.
• The net profit margin has inched higher from roughly 36.0% to about 36.1%, signaling a marginal improvement in long term profitability assumptions.
• The future P/E multiple has moved up from about 25.5x to approximately 31.6x, suggesting a higher valuation benchmark applied to projected earnings.