Can the South32 share price bounce back in FY23?

A mining worker wearing a white hardhat stands on a platform overlooking a huge mine as brokers predict what's next for the South32 share priceA mining worker wearing a white hardhat stands on a platform overlooking a huge mine as brokers predict what's next for the South32 share price

What a month it has been for the South32 Ltd (ASX: S32) share price.

After touching a recent high of $5.18 on 8 June, shares in the diversified mining and metals company tanked to a year-to-date low of $3.40 last Friday.

To put that into perspective, this represents a fall of 35% in just over five weeks.

South32 shares finished at $3.48 at yesterday’s market close.

We take a look at what the brokers think of the South32 share price now.

What’s ahead for South32 shares?

Despite suffering short-term volatility, the South32 share price could be in for a strong recovery according to Goldman Sachs.

The broker noted that the share is trading at 2.4 times FY23 EBITDA with a robust free cash flow (FCF) outlook.

This is being driven mostly by exposure to base metal price momentum as well as 10% copper equivalent production growth.

With increased capital returns, Goldman Sachs assumes South32’s buyback will continue to be extended at roughly US$200 million per annum.

Revenue in FY23 is expected to top US$11.39 billion, up from the US$9.87 billion estimate.

Furthermore, underlying EBITDA is projected to come in at US$4.53 billion, an increase from the US$4.45 billion anticipated for FY22.

Subsequently, Goldman Sachs has a buy rating on South32 shares and a 12-month price target of $5.

This implies an upside of roughly 43% on the current share price.

Morgans is even more bullish on South32 shares.

As reported by my Fool colleague, James, the broker is satisfied with the way the miner has transformed its diverse portfolio.

As such, Morgans has an add rating and a $6.10 price target on South32 shares.

South32 share price snapshot

Since the beginning of March, South32 has tumbled on the back of investors’ recession fears.

Nonetheless, its shares are up 17% over the past 12 months, but down 13% year-to-date.

South32 commands a market capitalisation of approximately $16.1 billion.

The post Can the South32 share price bounce back in FY23? appeared first on The Motley Fool Australia.

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… And South32 Ltd isn’t one of them.

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*Returns as of July 1 2022

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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