The South32 Ltd (ASX: S32) share price has come under pressure on Friday.
In early afternoon trade, the mining giant's shares are down 2% to $3.67.
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Why is the South32 share price falling?
The South32 share price is falling on Friday amid broad weakness in the materials sector.
For example, at the time of writing, the S&P/ASX 200 Materials index is down a sizeable 3.3%, making it the worst performing sector by some distance. This appears to have been driven by global recession fears.
Unfortunately, today's weakness is close to wiping out most of the gains the South32 share price made over the last three sessions after brokers responded to the company's quarterly update.
What are brokers saying?
No less than seven brokers retained their buy recommendations on the company's shares on Tuesday.
This includes the team at Morgans, which retained its add rating with a $5.30 price target. Based on the current South32 share price, this implies potential upside of 45% for investors over the next 12 months.
While Morgans wasn't overly impressed with miner's start to FY 2023, it remains positive on its outlook and sees plenty of value in the South32 share price.
A mixed quarter operationally for South32, not the kind of start to the year we were expecting. Solid copper and manganese volumes, outpacing consensus estimates. Coal, alumina, zinc and nickel production all trailed market estimates. Slow start to the year but S32 remains in robust shape, with clear exposure to a recovery scenario for China growth.
We view S32 as a key large-cap (ex-iron ore) sector pick. S32's share price has drifted lower almost in line with softer earnings, maintaining a free cash flow yield in the range of ~15% for FY23F while de-rating in terms of EBITDA multiple (now <3x).
