Nexa Resources: Higher Capex, Rising Cash Costs, and Limited Upside Support Ongoing Sell Rating

Nexa Resources SA, the Basic Materials sector company, was revisited by a Wall Street analyst on February 6. Analyst Carlos De Alba from Morgan Stanley maintained a Sell rating on the stock and has a $7.70 price target.

Carlos De Alba has given his Sell rating due to a combination of factors tied to Nexa’s latest operating results and forward guidance. While fourth-quarter mining volumes were generally solid and in several cases exceeded both his and market expectations, smelting sales volumes disappointed versus consensus, and the benefits from lower mining cash costs were not enough to offset concerns elsewhere.

Looking ahead to 2026, management guided to production that sits slightly below market forecasts at the midpoint, while at the same time outlining a materially higher capex plan of about $380 million, well above both consensus and his own model. In addition, projected mining cash costs are now expected to run higher than prior estimates, eroding margins and free cash flow, which, in his view, limits upside potential and justifies maintaining a cautious, Sell stance on the shares.

De Alba covers the Basic Materials sector, focusing on stocks such as Nucor, Steel Dynamics, and Alcoa. According to TipRanks, De Alba has an average return of 17.7% and a 58.20% success rate on recommended stocks.