logo-loader
viewAnglo American PLC

Anglo American “well positioned” says Goldman, but analysts downgrade to ‘neutral’ on valuation grounds

The US bank said the blue-chip miner’s current share price level, which has risen around 26% after hitting a six-month low in August, better reflected their forecast returns profile

Anglo American plc - Anglo American “well positioned” says Goldman, but analysts downgrade to ‘neutral’ on valuation grounds
Goldman added that there is a risk Anglo may not be able to secure a licence to expand a tailings dam at its Minas Rio mine in Brazil

Anglo American plc (LON:AAL) is “well positioned” in the current commodities cycle, according to analysts at Goldman Sachs, however, the bank downgraded the firm to ‘neutral’ from ‘buy’ on valuation grounds following a recent rise in the shares.

The US bank, which also trimmed its target price to 2,200p from 2,300p, said the blue-chip miner’s current share price level, which has risen around 26% after hitting a six-month low in August, better reflected their forecast returns profile and that the risk-reward was now “more balanced”.

READ: Anglo American's copper production dries up in severe drought

“With the strength of [platinum group metals] prices (palladium >US$1,700/oz, rhodium c.US$5,000/oz) and known weakness in diamonds…we now see limited scope for upward revisions to 2020 consensus EBITDA expectations”, Goldman said.

They added that there is a risk that Anglo may not be able to secure an operating licence to expand a tailings dam at its Minas Rio iron ore mine in Brazil, a requirement for the site to reach full capacity.

Without the licence, analysts said Minas would run “at a reduced capacity” in 2020 which would be negative for the share price.

Despite the somewhat neutral assessment, Anglo’s shares rose 1.7% to 2,106.1p, a 4.3% discount to Goldman’s new target price.

Quick facts: Anglo American PLC

Price: 1569.6 GBX

LSE:AAL
Market: LSE
Market Cap: £21.39 billion
Follow

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Emmerson PLC nearing completion of feasibility study on its Khemisset potash...

Emmerson Plc's (LON:EML) Hayden Locke tells Proactive London's Andrew Scott that while in lockdown they've been working to tie up the feasibility study on its Khemisset potash project in Morocco. ''We've been working hard on it over the last 12-18 months and it's starting to get very close to...

3 days, 6 hours ago

2 min read