On Friday, Exane BNP Paribas (OTC:BNPQY) increased its outlook for mining giant Anglo American (JO:AGLJ) Plc (AAL:LN) (OTC: NGLOY), upgrading the stock from Neutral to Outperform. The firm also lifted the price target to GBP 29.00 from GBP 24.00, signaling a positive view on the company's future performance.
The upgrade comes amid expectations of significant restructuring within Anglo American. The company, which has been in operation for over a century, is set to streamline its operations and reduce the complexities that have traditionally accompanied its business model.
The focus of the restructuring will be to transform Anglo American into a company heavily weighted towards copper, which is expected to account for over 60% of its proforma EBITDA, and iron ore.
The strategic shift is anticipated to make Anglo American a more attractive candidate for acquisition, which is an outcome the company had previously aimed to avoid. The process of restructuring is projected to be multi-phased and extend over several years.
The first major move in this plan is likely to be the sale of its coal assets, which is valued at approximately $5 billion according to the firm's Sum-of-the-Parts (SoTP) analysis. The announcement for the coal asset sale is expected to occur in the second half of 2024, with the completion targeted for the first half of 2025.
The analyst from Exane BNP Paribas highlighted that while the restructuring will not be immediate, the momentum for change is now in motion. This transition is seen as a long-term positive for Anglo American, as it aims to simplify its structure and focus on core commodities with strong market demand.
In other recent news, Anglo American Plc has been the subject of significant developments. The mining company has seen an upgrade from Bernstein SocGen Group, citing confidence in the company's ability to realize substantial cost savings.
In contrast, UBS downgraded the company's stock from Buy to Neutral, largely due to the company's restructuring plans. Simultaneously, CFRA maintained a Hold rating on the stock and increased the price target, reflecting a valuation based on an EV/EBITDA multiple of 5.5x.
The company's restructuring plan, which includes exiting from platinum group metals, De Beers, metallurgical coal, and nickel sectors by the end of 2025, is expected to generate substantial cost savings, projecting USD800 million by the end of 2025. Anglo American also confirmed receipt of a preliminary and conditional takeover proposal from BHP Group (NYSE:BHP) Limited, which values the company at GBP31 billion.
These developments are part of the company's ongoing efforts to streamline operations and enhance productivity. The market and investors are expected to closely monitor Anglo American's progress as it implements these strategic initiatives.
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