Mineral Resources Ltd (ASX: MIN) shares could offer investors huge returns over the next 12 months.
That's the view of analysts at Morgans, which have been running the rule over the mining and mining services company's quarterly update.
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What did the broker say?
According to the note, Morgans wasn't blown away by the company's performance during the last quarter. The broker summarised things, saying:
MIN posted a softer-than-expected 3Q'FY23 result. Disappointing volume from lithium (sales) and mining services, combined with weaker lithium prices, and delays to Mt Marion and Wodgina growth. A key theme in the result was the slow speed of various typical approvals across its WA operations (affecting Wodgina, Onslow and mining services). MIN reduced FY23 guidance for Mt Marion (volumes/costs) and mining services (tonnes). Iron ore unit costs are expected to be at the upper end of guidance.
Nevertheless, its analysts continue to see significant value in Mineral Resources shares at the current level, even after cutting its valuation slightly. This is due to its positive long term outlook. Morgans said:
We have adjusted our estimates for today's 3Q23 result and guidance updates, leading to our valuation-based Target Price reducing to A$103ps (from A$106). While a disappointing 3Q, the result does not impact our longer-term investment view on MIN. We maintain our ADD recommendation.
Big returns ahead for Mineral Resources shares
As mentioned above, Morgans has an add rating and $103.00 price target on the company's shares.
Based on its current share price of $72.05, this implies potential upside of 43% for investors over the next 12 months.
But it gets better! The broker is also forecasting a $5.79 per share fully franked dividend in FY 2024. This represents a sizeable 8% forward dividend yield for investors that buy shares at today's price.
Combined, this suggests that a total return of over 50% will be on offer from Mineral Resources shares if Morgans is on the money with its recommendation.
