Goldman Sachs says these ASX 200 mining shares can rise 20%+

If you’re looking for some mining sector exposure, then it could be worth checking out the two ASX 200 mining shares listed below.

That’s because Goldman Sachs has just put buy ratings on both of these shares. Here’s what the broker is saying:

Lynas Rare Earths Ltd (ASX: LYC)

According to the note, Goldman Sachs has a buy rating and trimmed price target of $7.50 on this rare earths producer’s shares. This implies potential upside of 28% for investors over the next 12 months.

The broker likes the ASX 200 mining share so much that it has it on its coveted conviction list. Its analysts highlight the company’s attractive valuation, the positive outlook for rare earths, and its production growth plans as reasons to buy. It explains:

Undervalued: the stock is trading at ~0.8x NAV (A$7.71/sh) and pricing in US$67/kg NdPr vs. spot at ~US$55/kg and our long run US$83/kg (real $, from 2028) NdPr price forecast. NdPr market balanced over medium term but deficits over long run on higher Chinese supply, but we see upside to current NdPr spot China at ~US$55/kg where we forecast US$75/kg across CY24 based on our SD model. Doubling NdPr production, LYNAS 2025 target (12ktpa NdPr) likely delivered in 2026 but could be upsized to >12ktpa NdPr (not in base case) based on the Mt Weld resource, possible third party feed, and ongoing supportive global government policy:

South32 Ltd (ASX: S32)

Another ASX 200 mining share that has been given the seal of approval by Goldman is South32.

Its analysts have a buy rating and $3.80 price target on its shares. This implies potential upside of 20% for investors from current levels.

The broker is feeling positive on the company due to the favourable outlook for a number of commodities that it produces. It said:

GS bullish copper, aluminium, zinc and met coal (~65% of S32 NTM EBITDA): leading to improving FCF in 2H FY24 FY25 (yield of ~10%) and forecast strong recovery in S32’s EBITDA (+50%) in FY25. In addition, we are bullish on the alumina market with forecast pricing over 2024/2025 of US$375/380/t based on the full curtailment of Kwinana, and we expect San Ciprian and other western world refineries to close, based on our cost curve analysis.

The post Goldman Sachs says these ASX 200 mining shares can rise 20%+ appeared first on The Motley Fool Australia.

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More reading

• Is the Lynas share price set to rise 60% in 2024?
• 5 things to watch on the ASX 200 on Tuesday
• South32 share price falls after disappointing December update
• Lynas share price sinks alongside 50% quarterly revenue fall
• How I invest and make money from ASX mining shares

Motley Fool contributor James Mickleboro 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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