We are upgrading our recommendation on SFR from Hold to BUY. Copper prices have outperformed our expectations as the supply issues in Chile and Panama have had a greater impact on the market than we anticipated. Accordingly, we have upgraded our near-term copper price forecasts by 15-25% to reflect the stronger market fundamentals. SFR boasts a large resource base, particularly at MATSA, and we believe the rising M&A activity in the copper sector is likely to see increased value ascribed to this asset. The higher copper prices have transformed SFR’s earnings outlook for FY24-FY27, and combined with an increase in our resource option value for MATSA drives a 29% increase in our price target to A$11.60.
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