Copper (HGM24) has long been considered one of the most pivotal materials in the global economic landscape, with a rich history of essential contributions across numerous industries. Leading commodity analyst Jeff Currie has recently labeled copper as “the new oil,” and believes copper is poised to become the next must-have industrial commodity, echoing the critical energy role of oil (CLN24) in past decades.
The analyst has observed a fresh surge in copper demand due to multiple economic factors, such as the rise of artificial intelligence (AI), the proliferation of data centers, the global shift toward green energy initiatives, and technological advancements in weaponry development. While the demand for copper is exploding, supply, on the other hand, is struggling to keep pace, with copper mines taking a considerable 12 to 26 years to be established.
Riding high on industry tailwinds is Hudbay Minerals Inc. (HBM), shares of which have surged past the broader market, hitting a peak of $10.49 on May 21. As HBM and copper prices both pull back from their recent highs amid longer-term bullish forecasts, now might be a prime time to grab some shares of this copper miner on the dip. Here’s a closer look.
About Hudbay Minerals Stock
Founded in 1927 and headquartered in Toronto, Hudbay Minerals Inc. (HBM) is a leading copper-focused mining company. Valued at a market cap of around $3.3 billion, the company boasts three long-life operations and a world-class pipeline of growth projects strategically located in top-tier, mining-friendly regions across Canada, Peru, and the U.S.
Shares of Hudbay have rallied 109.4% over the past 52 weeks, easily overshadowing the broader S&P 500 Index's ($SPX) return of about 28.2% during the same time frame.
While Hudbay prioritizes growth, it has also rewarded shareholders with semi-annual dividends since 2010, striking a balance between expansion and consistent returns. The company’s annualized dividend of $0.02 per share translates to a 0.21% dividend yield.
In terms of valuation, the stock trades at 23.44 times forward earnings, in line with its own five-year average. Plus, its price/earnings to growth ratio of 1.01x is much lower than mining industry giant Rio Tinto Group (RIO), which trades at 3.35x.
Hudbay's Q1 Earnings Beats Wall Street Projections
The company caught the eye of investors when HBM stock soared 14.2% following its Q1 earnings results on May 14, which smashed Wall Street’s projections on both the top and bottom lines. Revenue jumped 77.8% year over year to $525 million, surpassing estimates by 15.2%. Its adjusted EPS of $0.16 outpaced expectations by a whopping 433.3%.
Consolidated Q1 copper production totaled 34,749 tonnes, which remained consistent with the company’s expectations, as outlined in its mine plan. As of March 31, total liquidity surged to $618.9 million, comprising $284.4 million in cash and cash equivalents, alongside $334.5 million available under the company’s revolving credit facilities.
The company reiterated its fiscal 2024 consolidated copper production and cash cost guidance, aiming for production between 137,000 tonnes and 176,000 tonnes at a cash cost ranging from $1.05 per pound to $1.25 per pound.
Analysts tracking Hudbay expect the company’s profits to reach $0.44 per share in fiscal 2024, up 91.3% annually, and grow another 65.9% to $0.73 per share in fiscal 2025.
What Do Analysts Expect for Hudbay Minerals Stock?
Following the company’s solid Q1 performance, Wall Street analysts have shown strong bullish sentiment toward the stock. On May 14, RBC Capital Markets reaffirmed its “Outperform” rating for the mining company, citing Hudbay’s strong Q1 performance, stronger-than-forecast free cash flow, and progress on its Copper World project.
Overall, Hudbay Minerals stock has a consensus “Strong Buy” rating. Of the 14 analysts covering the stock, nine advise a “Strong Buy,” four give a “Moderate Buy,” and one recommends a “Hold.”
The average analyst price target of $10.27 indicates a potential upside of just 8.6% from the current price levels. However, the Street-high price target of $12.50 suggests that the stock could rally as much as 32.1%.
On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
