OZL – Morgans rates the stock as Upgrade to Add from Hold

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Morgans believes the stock’s retreat of nearly -20% since early April is overdone. The broker suspects sentiment is the culprit because of ongoing US/China trade uncertainty.

The broker suspects marginal investors use OZ Minerals as a proxy for the outlook for both the copper market and global growth, given its status as the largest and most liquid ASX-listed pure copper play.

The broker marks down copper prices for 2019-21 and raises gold assumptions for 2019. Overall, earnings forecasts improve by 6% over 2019-20 but are -12% lower for 2021.

Rating is upgraded to Add from Hold, as the current valuation is a key buy trigger, Morgans suggests. Target is reduced to $11.27 from $11.40.

Sector: Materials.

Target price is $11.27.Current Price is $8.89. Difference: $2.38 – (brackets indicate current price is over target). If OZL meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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