UBS upgraded South32 stock to Buy from Neutral, raising its price target to 250p from 205p. The bank cited improved operational performance and an attractive risk-reward profile. The upgrade follows a strong December quarter, with almost all assets meeting or exceeding expectations and FY26 guidance maintained.

The bank increased its EV/EBITDA valuation multiple to 7.0x from 6.0x, arguing South32 screens cheap compared to peers like Alcoa. UBS raised its EPS forecasts by 35% for FY26 and 8% for FY27, citing upside from silver prices and progress at key projects like Cannington and Hermosa.

Despite trading at 52-week highs, South32 offers compelling free cash flow yields of 6% to 13% through FY28. UBS sees potential upside to £3.25 per share, with downside risk at £1.35. The bank's constructive view hinges on the miner's commodity mix, particularly aluminum and copper exposure.