BofA Securities has moved Ero Copper Corp. (NYSE: ERO) off its Buy list, assigning a Neutral rating and trimming its price target to C$45 from C$49 following the companys guidance for 2026, which the bank judged weaker than anticipated. The stock is trading at $30.61 and has returned 128.6% over the past 12 months, according to the data cited.
The downgrade followed a 16% reduction in BofAs 2026 EBITDA forecast for the copper producer, a revision the firm attributed to the lower volumes and higher costs that Ero Copper outlined in its February 5 guidance. BofA also said the market reaction to that guidance could have been more pronounced, noting that the current share price appears to incorporate either the prospect of higher copper prices or better operational execution than the companys recent track record supports.
In updating its valuation model, BofA lowered the weighted average cost of capital to 12.6% from 12.8%. The bank linked that change to a decline in Brazil credit default swaps. Using its revised assumptions, BofA observed that Ero Copper is trading at an estimated 4.2 times 2026 EV/EBITDA and offers roughly a 12% free cash flow yield. The firm characterized that combination as reasonable, but said it is no longer as compelling when weighed against execution risks.
Separately, Freedom Capital Markets has begun coverage on Ero Copper with a Buy rating and a $32 price target. That firm highlighted the companys high-grade, low-cost asset base. Ero Coppers operations are principally based in Brazil, a jurisdiction the coverage noted for its mining-friendly regulations and resource endowment.
These analyst moves underscore diverging views among market participants. BofAs change reflects a more cautious stance after the companys guidance revealed weaker near-term metrics and higher cost pressures. Freedoms initiation indicates conviction in the underlying asset quality and cost position despite the guidance-led uncertainty. Both perspectives are playing out while the shares carry a strong one-year return, according to the cited trading data.
Investors assessing Ero Copper now face a trade-off between valuation metrics that look attractive on paper and the risk that the company may struggle to hit the improved execution or commodity-price outcomes that current market pricing seems to imply.
What to watch
- Company execution against the 2026 guidance figures released on February 5.
- Movements in copper prices, which could affect how much upside the market is discounting.
- Credit market indicators for Brazil that influence valuation inputs such as WACC.