Why did the South32 share price take a beating on Tuesday?

The South32 Ltd (ASX: S32) share price struggled on the market on Tuesday.

South32 shares fell 1.37% to close the session at $3.60. For perspective, the S&P/ASX 200 Index (ASX: XJO) gained 0.28%.

Let’s take a look at what went on with the South32 share price today.

Broker downgrade

South32 is not the only ASX mining share that finished in the red today. BHP Group Ltd (ASX: BHP) shares fell 1.43%, while the Whitehaven Coal Ltd (ASX: WHC) share price lost 4.52%.

The S&P/ASX 200 Materials Index (ASX: XMJ) descended 1.19% today, making it the second-worst-performing sector behind the S&P/ASX 200 Energy Index (ASX: XEJ).

However, a broker downgrade may have impacted investor sentiment in the South32 share price.

JP Morgan has relegated the company’s share price from overweight to neutral but has maintained a $4.10 price target on the company’s shares. This implies a nearly 15% upside from the current price.

Analysts like South32’s exposure to base metals, but are mindful of the global GDP growth outlook. Analyst Lyndon Fagan, in quotes cited by the Financial Review, said:

S32 continues to offer relatively inexpensive exposure to base metals, with a net cash position (albeit lower than expected), ongoing share buybacks, and a medium-term growth profile.

However, we remain cautious on the global GDP growth outlook, and the impact on commodity prices resulting from a material slowdown. On this basis, we downgrade to neutral.

South 32 reported mixed quarterly production results to the market yesterday. For example, metallurgical coal production fell 8%, while copper production lifted 12%. Alumina production fell 8%, while aluminum output lifted 9%. Nickel production fell 11%, while silver and zinc production descended 9% and 3%, respectively.

South32 share price snapshot

South32 shares have shed 5% in the past year, while they have lost more than 10% in the year to date.

For perspective, the ASX 200 has slid nearly 9% in the past year.

South 32 has a market capitalisation of more than $16.5 billion based on the current share price.

The post Why did the South32 share price take a beating on Tuesday? appeared first on The Motley Fool Australia.

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More reading

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• Why Austal, New Hope, Playside, and South32 shares are dropping

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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