Southern Copper (SCCO) shares are poised to benefit over the the next 12 months from higher copper price, with the market anticipated to be in deficit despite the difficult macro landscape, UBS said in a note Wednesday.
The company's shares are also expected to benefit from better visibility on volume growth, with the Tia Maria project to support about 10% growth over the next three to four years, the firm said.
"We expect copper stocks to continue to trade at a premium to the diversified miners given the attractive medium-term fundamentals of copper," UBS said.
The firm also said it expects Southern Copper to continue to trade at a premium to Freeport-McMoRan (FCX) and Antofagasta because of its "reliable operational performance, its high quality portfolio of low-cost long-life assets, its strong balance sheet, its simple structure, and its growth optionality."
UBS upgraded Southern Copper's rating to buy from neutral and maintained its $120 price target.
The company's shares rose over 3% in recent Thursday trading.
Price: 93.75, Change: +3.41, Percent Change: +3.77
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