While South32’s March quarter production was overall slightly below UBS’s forecast, management expects a strong June quarter. UBS notes net cash flow was strong during the quarter despite the ongoing buy-back and sees modest upside risk to FY21 earnings.
South32 has increased guidance for Cannington by circa 10% and for South Africa Manganese.
The broker thinks the risk-reward on South32 is attractive and retains its Buy rating with a target of $3.30.
Target price is $3.30.Current Price is $2.93. Difference: $0.37 – (brackets indicate current price is over target). If S32 meets the UBS target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).