Southern Copper (SCCO) and Vale (VALE) were downgraded Thursday to Underperform from Neutral and to Neutral from Buy, respectively, at Bank of America, citing stretched valuations and weakening near‑term operational performance.
Southern Copper (SCCO) has undergone a significant re‑rating and now trades at 16.3x estimated 2026 EV/EBITDA, a level BofA analysts led by Caio Ribeiro said is difficult to justify given thin free cash flow yields of 3% in 2026 and expectations for production to decline by ~3% over the next years, from 938M tons in 2025 to 910M tons in 2027 due to depletion and lower grades, with limited catalysts to offset these trends.
While BofA’s medium‑term outlook for copper remains constructive, the analysts believe Southern Copper’s (SCCO) current share price “already embeds a bullish scenario that is unlikely to materialize near term.”
Vale (VALE) shares have been helped by strong operational performance in 2025 and de-risking, but with iron ore now below $100/ton, the ongoing ramp‑up of Simandou, and expected 2%–3% declines in China steel demand/production, BofA sees limited upside at this stage.
While the operational outlook remains solid, as reflected by recent results, BofA believes the current share price already captures most of the near‑term potential.