SCCO: Delays At Tia Maria Will Likely Limit Upside Despite Sector Momentum

Southern Copper's analyst price target has been marginally revised down from $118.88 to $117.76, as analysts factor in a higher discount rate and recent shifts in commodity price forecasts.

Analyst Commentary

Recent Street research reveals a wide range of analyst opinions on Southern Copper, highlighting both optimism regarding copper market dynamics and caution around execution and valuation challenges.

Bullish Takeaways

• Bullish analysts have raised their price targets, in some cases substantially, as copper and precious metal prices reach multi-decade highs. Supply disruptions are also supporting stronger pricing.
• The outlook for 2025 and 2026 earnings has improved, with analysts increasing EBITDA estimates in response to updated expectations for the global copper market and Southern Copper's parent company.
• Expectations for robust free cash flow continue, supporting the company's ability to sustain its attractive dividend policy. This policy includes both cash and stock components.
• Some analysts now anticipate tightening supply in the copper market through 2026. The company is seen as well-positioned to benefit from restricted supply and elevated prices.

Bearish Takeaways

• Bearish analysts express concern over execution risks, particularly referencing project delays such as those at Tia Maria. These delays could affect earnings in future years.
• Valuation remains a key focal point for caution. Some analysts note that shares are trading at elevated levels compared to peers, which may limit near-term upside.
• There are references to continued Sell ratings, with skepticism about whether strong commodity pricing is sufficient to offset operational and project-specific headwinds.
• Parent company developments and external factors, such as bids for unrelated assets, are viewed as possible contributors to a heightened valuation discount in the near term.

What's in the News

• The U.S. Department of the Interior has added copper, silver, and metallurgical coal to its "critical minerals" list. This move could lead to changes in tariff policies affecting Southern Copper (Financial Times).
• Southern Copper's Board of Directors has authorized a quarterly cash dividend of $0.90 per share and a stock dividend of 0.0085 shares per share. Both dividends are payable on November 28, 2025, to shareholders of record on November 12, 2025.
• The company reported third-quarter copper production of 234,892 tonnes, a decrease from 252,219 tonnes last year. In contrast, zinc and silver output increased year-over-year.
• Southern Copper completed the repurchase of approximately 119.5 million shares, representing 13.68% of total shares, under its buyback program.

Valuation Changes

• Consensus Analyst Price Target has been revised down marginally from $118.88 to $117.76.
• Discount Rate has risen slightly, increasing from 7.66% to 8.14%.
• Revenue Growth projections remain virtually unchanged at approximately 4.80%.
• Net Profit Margin estimates are stable, with a negligible change from 31.40% to 31.40%.
• Future P/E ratio forecast has increased modestly, moving from 27.02x to 27.36x.