The firm said it lowered its rating on the copper producer based on muted copper prices and its belief Southern Copper will be slower to ramp production growth.
FBR Capital cut its price target on the stock to $35 from $37.
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Separately, TheStreet Ratings team rates SOUTHERN COPPER CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation: "We rate SOUTHERN COPPER CORP (SCCO) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share and deteriorating net income." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SCCO's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, SCCO's share price has jumped by 26.04%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- SCCO's debt-to-equity ratio of 0.71 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that SCCO's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.22 is high and demonstrates strong liquidity.
- SOUTHERN COPPER CORP's earnings per share declined by 9.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SOUTHERN COPPER CORP reported lower earnings of $1.92 versus $2.28 in the prior year. For the next year, the market is expecting a contraction of 8.6% in earnings ($1.76 versus $1.92).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Metals & Mining industry average. The net income has decreased by 9.5% when compared to the same quarter one year ago, dropping from $372.74 million to $337.30 million.
- You can view the full analysis from the report here: SCCO Ratings Report