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On Tuesday, Bernstein analysts upgraded Antofagasta Plc. (LON:ANTO:LN) (OTC: ANFGF) stock, a mining company listed on the London Stock Exchange (LON:LSEG), from 'Market Perform' to 'Outperform'. Alongside the upgrade, the firm set a price target for the company's shares at GBP19.50. The $20.4 billion market cap company maintains a "Good" financial health rating according to InvestingPro analysis.
The upgrade was based on the evaluation that the current copper price is nearing what the analysts consider 'value' territory, implying that it may be an opportune time for investment. The analysts also noted Antofagasta's appealing valuation, which they believe offers a chance to purchase modest growth in the copper sector. The company has maintained dividend payments for 31 consecutive years and operates with a moderate debt-to-equity ratio of 0.65.
Antofagasta's potential for growth is partly tied to the expected Environmental Impact Assessment (EIA) approval to extend the life of the Los Pelambres mine beyond 2035. Bernstein analysts anticipate this approval could occur in 2025, with the possibility of a delay until 2027.
The company is also awaiting EIA approval to extend the life of the Zaldivar mine, with a resolution expected by May 2025. The process has already seen two rounds of comments and responses, completed in the first and fourth quarters of 2024. Should the EIA not be resolved by the May deadline, Zaldivar, which is considered the lowest value of Antofagasta's mines, would need to implement a temporary closure plan. This would likely result in reduced production and incur additional costs.
The analysts' commentary underscores the importance of the EIA approvals for Antofagasta's future operations and the potential risks involved if the approvals are not granted in a timely manner. The upgrade to 'Outperform' reflects Bernstein's positive outlook on the company's stock amidst these developments.
According to InvestingPro's Fair Value analysis, the stock appears slightly overvalued at current levels. For deeper insights and additional ProTips, access the comprehensive Pro Research Report available exclusively to subscribers.
In other recent news, Antofagasta Plc has seen changes in its stock rating from two financial services firms. Canaccord Genuity upgraded Antofagasta's stock from Hold to Buy, maintaining the price target at GBP20.65, despite reduced production and EBITDA forecasts for fiscal years 2024 and 2025. Antofagasta's current EBITDA stands at $2.93 billion, with the adjustment primarily due to conservative volume predictions across the company's operations.
Simultaneously, Barclays (LON:BARC) upgraded Antofagasta's stock from Underweight to Equalweight, raising the price target to GBP20.00. The adjustment follows a period of underperformance by Antofagasta's stock compared to the broader market and its peers in the mining sector. Despite a disappointing third-quarter production report, Antofagasta's valuation multiples remain at a premium to its peers, according to Barclays.
In terms of financial performance, Antofagasta reported increases in revenue, EBITDA, and cash flow in its 2024 half-year results. The company plans to boost copper production by approximately 35% to 900,000 tons per year, backed by significant investments in brownfield projects. These are among the recent developments for Antofagasta, as it continues to focus on its core projects in Chile and Peru, while exploring opportunities in Argentina and other regions.
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